The family of a college student who took his own life after they believed he had lost nearly $ 750,000 to Robinhood filed a lawsuit against stock trading on Monday.
The mother, father and sister of 20-year-old Alex Kearns, who died in June, filed a lawsuit in California court, accusing Robinhood of wrongful death, negligent emotional distress and unfair trading practices, according to the first complaint. obtained by CBS News.
Kearns’ family claims that the company “caused immediate and near death of one of its victims” through “deceptive communication” on its investments and “virtually non-existent” customer service, The Wall Street Journal reported, stating the complaint.
Kearns was a University of Nebraska-Lincoln student who started using Robinhood in high school. He started an options trading through the stock trading app, thinking his highest possible loss would be less than $ 10,000.
Last June, Kearns learned that his account had been locked due to an apparently negative balance of $ 730,000. Robinhood sent an automatic late-night email at 3:26 AM asking Kearns to take “immediate action” to pay about $ 178,000 in a few days, CBS News reported.
The complaint says that Kearns emailed the Robinhood support team three times that evening and the following morning, asking for help and saying, “I was wrongly allocated more money than I should have received, my purchased wells should have covered the wells I sold. ” He reportedly only received automated replies, and Robinhood did not provide a customer service phone number.
The complaint also alleges that Robinhood did not inform Kearns that he might have had options he could use that “more than covered his obligation,” the Journal reported, according to the complaint.
In a note to the family before he committed suicide, Kearns wondered how he was able to execute high stakes trades, saying he “had no idea what I was doing in hindsight” and thought that he “risked the money I actually owned,” said CBS News.
Although Alex’s panic and confusion are clearly caused by Robinhood’s deception communication, Robinhood was impossible to achieve at the most critical moment repair the damage it did, ”the complaint said.
Robinhood did not immediately respond to The Hill’s request for comment, but told the Journal it was “devastated by the death of Alex Kearns.”
“We remain committed to making Robinhood a place to learn and invest responsibly,” a spokesperson told the paper, noting that the company now offers additional tools and education on options.
The spokesperson also said Robinhood has adjusted its options trading eligibility requirements, adjusted its customer service response to escalate certain requests for help, and created “live voice support” for those with open or recently expired option positions.
The stock trading company has risen in popularity over the past year during the coronavirus pandemic as millions of users joined the platform.
Robinhood is also facing class-action lawsuits from customers after the company restricted trading of GameStop and other stocks during the r / WallStreetBets subreddit campaign that rocked Wall Street earlier this month.