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Robinhood Markets Inc. is an American financial services company that is known to offer commission-free trades of stocks and exchange-traded funds. It has been on the news recently due to the controversies relating to GameStop trading.
Now it is back on the headlines but for another reason. The parents of a 20-year-old student sued Robinhood on Monday, Feb. 8, for the wrongful death of their son Alex Kearns.
Why the Kearns is going after the financial company
Baked on the filing, Dan and Dorothy Kearns sued Robinhood as they blamed the company for their son’s suicide. The couple stated that their son thinks he incurred big losses and now owes Robinhood $730,165 in cash. They said that the misunderstanding pushed their son to end his life last summer.
“This case centers on Robinhood’s aggressive tactics and strategy to lure inexperienced and unsophisticated investors, including Alex, to take big risks with the lure of tantalizing profits,” CNBC News quoted part of the complaint that was filed in a California state court in Santa Clara.
The complaint also pointed out that Robinhood’s “reckless conduct directly and proximately caused the death of one of its victims.” This was stated because, according to Dorothy and Dan, their son Alex attempted to contact Robinhood customer service thrice to inquire about his huge negative balance.
However, his calls only received automated replies. No one was there to explain to him what the balance on his account means. It was suggested that if only Alex got to talk with someone from Robinhood and has gotten the clarification that he doesn’t owe that much money, he would still be alive today.
Why Alex thinks he owes Robinhood thousands of dollars
The Kearns were interviewed by CBS News and revealed that they knew that their son has been into trading, but they did not see any harm in doing that. However, in June of last year, the trouble began when the Robinhood mobile app placed his account on hold and showed $730,000 in the red.
The app also stated that he must pay $170,000 in the coming days. The next day, on June 12, Alex took his life by stepping in front of an approaching train.
It was said that Alex had been trading options instead of stocks so the negative balance that he saw was apparently a provisional amount that was put on display until the options get settled on his account. This means that he owes nothing, and he misunderstood.
“He thought he blew up his life,” Dan Kearns said in the interview. “He thought he screwed up beyond repair.”
