"We disagree with the allegations in the complaint by the Massachusetts Securities Division and intend to defend the company vigorously," the company said in a statement sent to CBS News. Katy Laplante, a former customer service worker for Robinhood. "There was a very deliberate effort on the part of Robinhood to particularly entice younger, inexperienced investors." "I think it demands some sort of national standard for this behavior," said William Galvin, Massachusetts secretary of the commonwealth. The company has also recently been under scrutiny from regulators. "Though Alex was merely a senior in high school when he opened an account with Robinhood and had little or no income, Robinhood determined he was qualified enough to enter into the world of trading sophisticated financial options." "Robinhood built out its trading platform to look much like a videogame to attract young users and minimize the appearance of real-world risk," the lawsuit states, according to NBC Chicago. The lawsuit, filed in California's Santa Clara County on Monday, also alleges the company recklessly preys upon inexperienced traders. "Basically, 'We'll get back to you later.'" “Their response was a canned reply," Dan Kearns said. The stock trading app provided “no meaningful customer support” after the technical error duped Alex Kearns into thinking he owed a fortune, leading to his suicide, his family argued. They’re also seeking damages for emotional distress and unfair business practices. The family is now suing the company for the wrongful death of their son. There was no intention to be assigned this much and take this much risk, and I only thought that I was risking the money that I actually owned…F-k Robinhood.” "I also have no clue what I was doing now in hindsight. “How was a 20-year-old with no income able to get assigned almost $1 million worth of leverage?" Kearns wrote. In a note Kearns wrote to his parents shortly before his death, he attempted to explain the financial hole he said he thought he’d dug himself. “He thought he screwed up beyond repair.” "He thought he blew up his life,” his father, Dean Kearns, told CBS News. The $730,000 was likely a temporary amount that prematurely reflected on his balance before his account deposited options he’d acquired.ĭorothy and Dan Kearns, Alex Kearns parents. The steep negative balance was likely an error since Kearns was trading options, not stocks, CBS News reported. If you have any questions about your margin call, please feel free to reach out. "We're reaching out to confirm that you've met your margin call and we've lifted your trade restrictions. The next day, Robinhood sent a response message acknowledging the error, the lawsuit alleged. On June 12, Kearns died after stepping in front of an oncoming train. "We wanted to let you know that we're working to get back to you as soon as possible, but that our response time to you may be delayed." "Thanks for reaching out to our support team!" The email stated. Kearns received an automated email assigning him a ticket number in response. “I was incorrectly assigned more money than I should have, my bought puts should have covered the puts I sold,” Kearns wrote the company, court filings state. He then tried contacting Robinhood’s customer support but was unsuccessful in reaching an operator. Hours later, he received another message warning he needed to take “immediate action” and settle up on $170,000 of the debt, CBS News reported. On June 11, the University of Nebraska student was notified by Robinhood he’d accrued the massive debt. A lawsuit has been filed in California this week after a 20-year-old Nebraska college student died by suicide, apparently incorrectly believing he owed hundreds of thousands of dollars to investment application Robinhood.Īlex Kearns, who had bought and sold options on the stock trading app, died by suicide in June after Robinhood mistakenly notified him he owed $730,000, according to a wrongful death suit filed by his family.
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