The family of a student who took his own life after thinking he lost nearly $ 750,000 on Robinhood filed a lawsuit for wrongful death against the stock exchange on Monday.
Alex Kearns’ mother, father and 20-year-old sister, who died in June, filed a lawsuit in California state court, accusing Robinhood of unlawful death, negligent provocation of emotional distress and unfair business practices. according to the complaint that was first obtained by CBS News.
The Kearns family claims that “the company’s reckless conduct directly and closely caused the death of one of its victims” through “misleading communications.” about its investments and “virtually non-existent” customer service, The Wall Street Journal reported, citing the complaint.
Kearns was a student at the University of Nebraska-Lincoln who began using Robinhood during high school. He started an options transaction through the stock trading app, considering that the largest possible loss would be less than $ 10,000.
In June last year, Kearns learned that his account had been blocked due to an apparent negative balance of $ 730,000. Robinhood sent an automatic email late at night at 3:26, asking Kearns to take “immediate action” to pay about $ 178,000 in a few days, CBS News reported.
The complaint states that Kearns emailed the Robinhood support team three times that night and the next morning, requesting assistance and saying, “I was incorrectly allocated more money than I should have, my purchases would have been it had to cover the sales I sold. ” He reportedly received only automatic responses, and Robinhood did not provide any customer service phone numbers.
The complaint also claims that Robinhood did not inform Kearns that it could have options that it could use, which would have “covered more than its obligation,” the Journal reported, according to the complaint.
In a note to the family before committing suicide, Kearns questioned how he managed to make high-stakes transactions, saying he “has no idea what I’m doing now in retrospect” and thought he “risks the money I actually owned, ”according to CBS News.
“Although Alex’s panic and confusion were clearly caused by Robinhood’s deception communications, Robinhood was impossible to reach at the most critical moment repair the damage it has caused, ”the complaint said.
Robinhood did not immediately respond to Hill’s request for comment, but told the newspaper that she was “devastated by Alex Kearns’ death.”
“We remain committed to making Robinhood a place of responsible learning and investment,” a spokesman told the newspaper, noting that the company now offers additional tools and education on options.
The spokesman also said that Robinhood changed its eligibility requirements for options trading, adjusted its customer service response to escalate certain requests for help, and created “live voice assistance” for those with recently opened or expired options. .
The stock company has grown in popularity over the past year during the coronavirus pandemic, as millions of users have joined the platform.
Robinhood is also facing lawsuits from customers after the company restricted GameStop trading and other actions amid the r / WallStreetBets subredditing campaign that rocked Wall Street earlier this month.