Robinhood sued by parents of Alex Kearns who died by suicide thinking he lost US$730,000
- Robinhood notified Alex Kearns in June of what he thought was a US$730,000 loss on a trade
- He was unable to communicate with anyone at the company, and was thrown into a highly distressed mental state
Robinhood was sued by the parents of a 20-year-old trader who killed himself last year after he incorrectly believed he had lost US$730,000 on an options trade.
The parents of Alex Kearns filed a wrongful-death lawsuit Monday in California state court, claiming the no-fee brokerage preys on inexperienced and unsophisticated investors like their son. They seek unspecified damages.
“Robinhood’s aggressive ploys to attract young customers, combined with its flagrant disregard for its duty of care to its customers, creates a time bomb that was destined to lead to the type of tragedy that happened to Alex,” according to the complaint.
With its playful interface, Robinhood has brought a new class of US traders into the market, raising concerns about the “gamification” of investing without fully explaining the risks. Critics claim Robinhood and other platforms have turned investing into an online social activity.
Retail investors who strategised on Reddit message boards and executed their trades through online platforms such as Robinhood created turbulence in some stocks in recent weeks, including GameStop whose shares rose multiple times before retreating recently.
