Robinhood sued Monday for culpable homicide through the family circle of Alex Kearns, a 20-year-old consumer who committed suicide last summer after believing he had accumulated large losses in the millennial inventory trading application.
“This case focuses on Robinhood’s competitive tactics and strategy to inspire green and unsophisticated investors, adding Alex, to take great dangers with the appeal of exciting profits,” said the complaint filed through his parents Dan and Dorothy Kearns, and his sister Sydney Kearns. in a California state courthouse in Santa Clara. The family circle is founded in Naperville, Illinois.
“Robinhood’s reckless driving directly caused the death of one of his victims,” the complaint states. The lawsuit also accuses the broker of causing emotional misery and unfair business practices negligently.
Alex Kearns, then a sophoble student at the University of Nebraska at Lincoln, committed suicide in June after thinking he had a negative monetary balance of $730,165 in Robinhood.
The lawsuit alleges that Kearns misunderstood Robinhood’s monetary condition and his circle of relatives of monetary obligation.
The lawsuit says Kearns made three attempts to touch Robinhood’s visitor service in connection with the large underwater balance.
However, his messages received automatic responses to the complaint.
In a memorandum to his circle of relatives noticed through CNBC, Kearns accused Robinhood of allowing him to take too many risks. He said the sales features he had purchased and the shares sold “should have been cancelled,” according to the memo.
Put are the ones that give the owner the right to sell a value at a specific price.
The trader said he “had no idea” what he was doing, according to the memo.
“How can a 20-year-old without a source of income be given leverage of nearly $1 million?”Read the note Kearns wrote to his family. “I didn’t have the goal of being assigned so much and taking so many risks, and I imagine he was risking the money he had. “
A Robinhood spokesman told CNBC: “We were devastated by the death of Alex Kearns. Since June, we have taken a step forward with our offer. “
Robinhood has a popular access point to the new investor inventory market, which increased from 1 million users in 2016 to more than thirteen million last spring. Robinhood only in January.
Robinhood, which is led by CEO Vlad Tenev, has been subjected to scrutiny for its “gamification” of alleged investments and predating practices.
Robinhood also faces the movements of consumer elegance after the resolution of the application to limit trade in certain values in the wake of the recent GameStop controversy. The brokerage firm, which plans to go public in 2021, has continually stated that most of its users are long-term investors.
Robinhood, one of the biggest beneficiaries of the retail boom in 2020, has also been subjected to scrutiny for its consumers without adequate investment training. Last year, Massachusetts regulators filed a lawsuit against Robinhood, accusing green investors of applying predatory marketing trading. .
The Securities and Exchange Commission accused the broker in December of misleading clients on how the application of inventory trading earns cash and does not provide the promised execution of transactions.
The Kearns family’s complaint reads: “Robinhood not only allowed Alex to open the account, but when Alex was in his first year of college that same year, he allowed him to exchange options.
“Worse, Robinhood provided virtually no investment guidance, and its virtually non-existent ‘customer service’, consisting of automatic email responses, without any human contact or interaction,” the circle of relatives said in demand.
Here’s Robinhood’s full relationship with the trial.
“We have been devastated by the death of Alex Kearns. Since June, we have made innovations in our feature offering. These include the addition of the ability to work contracts in the app, the recommendation to help customers with an early assignment, updates on how we demonstrate purchasing power, more educational fabrics on features and new monetary criteria, and revised delight in the needs of new consumers looking to negotiate Level 3 features. In early December, we also added live voice for consumers with a recent open or expiration option position, and plan to expand to other use cases. We have also repositioned our protocol to allow customers to email us for help with training and early assignments. We remain committed to making Robinhood a position to be informed and invest in a responsible manner. “
– with reports via Dan Mangan, Kate Rooney and Yasmin Khorram from CNBC.
Subscribe to CNBC PRO for exclusive data, research and programming on business days around the world.
Do you have any confidential information? Us to listen to you.
Sign up for loose newsletters and get more CNBC in your inbox
Get it in your inbox and more information about our services.
© 2021 CNBC LLC. All rights are reserved. An NBCUniversal department
Knowledge is a real-time snapshot: data is delayed for at least 15 minutes, monetary and global industry news, inventory quotes, and market knowledge and analysis.
Data also by