“If he could get his hands on someone … he would live today,” Dan said in an interview with CNN Business.
The Kearns family is suing Robinhood for the unjust death of their son, who – like a growing number of novice traders – has turned to the free trading app for access to sophisticated financial instruments, such as options.
The tragedy drew attention to the potential dangers of the free trade explosion that Robinhood and its gamified platform helped trigger.
“It’s almost as if he was martyred just to save us from what he thought was a huge financial burden, which, of course, is not the case,” Dan said.
Robinhood under fire
Alex Kearns’ Robinhood account showed a negative balance of $ 730,000 – much more money than he had for his name, according to the lawsuit.
“Anyone would panic to see those numbers on their screen,” his mother, Dorothy, said in an interview.
Alex did not realize that his negative balance would have been erased by exercising and resolving the options he had, the family said. He didn’t really owe her that staggering amount.
“He shouldn’t have been allowed to trade these complicated options in the first place. He had no training, no income, no qualifications to do those sophisticated trades,” Dan said.
The lawsuit, which describes Alex as a “true idiot with a terrible sense of humor” and a “golden heart,” claims that Robinhood draws inexperienced investors to take big risks – without providing the necessary customer support and guidance. investments.
In a statement, Robinhood said that in order to determine eligibility for options trading, the company assesses clients’ investment experience and knowledge, investment objectives and financial information, such as revenue. For existing customers, Robinhood said it is considering their trading activity on the platform.
Robinhood added that it “always tries to comply with the applicable rules and regulations” of the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA).
Following the Kearns trial, Robinhood said it has made a number of improvements to its options offering, including providing guidance to help customers, updates on how it displays purchasing power, and live voice support for customers with open options positions.
“We were devastated by the death of Alex Kearns,” Robinhood said. “We remain committed to making Robinhood a place of responsible learning and investment.”
Frantic search for answers
The nightmare for the Kearns family began on June 11, 2020, when the holder of the options that Alex had sold exercised his options, forcing the 20-year-old to buy the underlying guarantee, according to the lawsuit.
At 11:01 p.m., Robinhood notified Alex Kearns by e-mail that his account was restricted, meaning he could not make new transactions or withdrawals, the lawsuit said. Minutes later, another email indicated that he was required to buy shares worth more than $ 700,000 as part of option transactions, according to the lawsuit.
Even though Alex thought he could lose a maximum of $ 10,000 after seeing the Robinhood app, he thought he had somehow lost $ 730,000, the lawsuit said.
Desperate for answers, Alex emailed Robinhood for help three times that night and the next morning, the family said.
At the time, Robinhood sent customer support requests exclusively by email, Dan said.
Robinhood did not answer CNN Business’s questions about its customer support.
Alex has never heard from Robinhood beyond the automatically generated responses according to the trial. He took his own life on June 12.
“I was horrified,” Dan said of the fact that his son tried and failed to get help from Robinhood. “It really hurt, to be honest, because … I knew what he was going through. I was just visualizing what he was going through when he was writing the notes and seeing those emails, not being able to reach anyone. “
“He needed a little help”
Before he died, Alex left a note showing his confusion about options trading and explaining that he did not want to die.
“The powers I bought / sold should have been canceled as well, but I have no idea what I was doing now in retrospect,” Alex wrote, according to the lawsuit. “There was no intention to attribute so much to me and risk so much, and I just thought I was risking the risk of the money we actually have.”
Alex’s parents expressed frustration that their son had no way to communicate faster with Robinhood.
“He’s in a complete state of panic. He needed a little help. I think that should have reassured him,” Dan said.
In addition to the unjust death, the Illinois family’s complaint accuses Robinhood of negligently provoking emotional distress and unfair business practices. The damage they seek will be determined at a later date.
Changes to Robinhood
Alex’s parents have expressed hope that their process will bring to light some of the risks that come with trading on Robinhood.
After Alex’s death, Robinhood CEO Vlad Tenev and former co-CEO Baiju Bhatt wrote that they were “personally destroyed by this tragedy” and vowed to make improvements to their platform.
“We are grateful for this message. And he supported those words with a very important donation to prevent suicide,” Dan said, referring to Tenev. “I think he regrets this and I am sorry for our situation.”
The company announced in June that it was making a $ 250,000 donation to the American Foundation for Suicide Prevention and urged people in need to seek help.
Robinhood said this week that recent changes include new financial criteria and revised experience requirements for new customers who want to trade advanced option strategies and intend to extend this to other situations. Robinhood has also changed its system to increase e-mail support requests from some options traders and to provide live voice assistance to customers with open options.
The Kearns family expressed support for the changes, but said Tenev and Robinhood need to take more action, including additional telephone assistance.
“I don’t think he has made adequate progress to protect immature novice investors, such as my son,” Dan said.
Asked to answer those who would argue that Alex was ultimately responsible for the investment decisions she made, Dorothy said it wasn’t her son giving too much money.
“It would be different if they made investment decisions and lost a lot of money based on those decisions and took their own lives,” she said. “It would still be tragic, but we wouldn’t be here today … because that would have been his fault.”
Instead, Dorothy said she believes Robinhood is responsible for leaving her son confused and unanswered.
“If he had received a response from Robinhood or if there was some kind of responsibility on the screen,” she said, “it wouldn’t have been a problem.”