The Securities and Exchange Commission, which Underwood mentioned in the letter as a a regulator that should be urged to take action here, declined to comment. “This spotlights some real gaps in our systems and oversight,” she said. Lawmakers are “exploring avenues to compel” regulators to increase oversight on Robinhood and similar platforms, Underwood said in an interview. The tragedy could prompt increased scrutiny from regulators. That customer service typically takes place via email. It’s real life.”Ī Robinhood spokesperson said the company has doubled the number of customer support agents it has and plans to add hundreds of registered financial services professionals by the end of the year. “Robinhood has designed a platform that feels very much like a video game…It’s not a game. “I see that as a recipe for disaster,” Underwood told CNN Business. Underwood accused Robinhood of incentivizing risky trading to new investors while providing limited customer support. The Kearns family believes Alexander was misled by the app’s interface suggesting he owed $730,000, when that was not really the case. Kearns, a college student with no income, was using Robinhood to trade complex options instruments. The tragedy drew widespread attention to the potential risks of the free-trading boom ushered in by Robinhood, which caters to young, first-time investors. The company also announced plans at the time to make a $250,000 donation to the American Foundation for Suicide Prevention and urged people who are in crisis to reach out for help. “We are personally devastated by this tragedy,” Vlad Tenev and Baiju Bhatt, Robinhood’s co-CEOs, wrote in a blog post. Last month, Robinhood announced plans to improve its user interface in response to Kearns’s death. “We take our responsibility to our customers seriously and will work with the Representatives and Senators to address their questions and concerns,” a spokesperson said in a statement. In response to the letter, Robinhood said it would work with the lawmakers. The letter was also signed by Illinois Senators Dick Durbin and Tammy Duckworth. Underwood, a Democrat who represents the Illinois district where Kearns’s parents live, wrote a letter to Robinhood that expressed “serious concerns” about a “lack of safeguards” at the $8.6 billion trading platform. “If you’re reading this, then I am dead,” the note started.Apparent suicide by 20-year-old Robinhood trader who saw a negative $730,000 balance prompts app to make changes Within seconds, a four-paragraph letter flashed on the screen.
His father, Daniel Kearns, powered up his son’s laptop in their home in Naperville, Ilinois. Alex also left an ominous message on a small yellow sticky note on his bedroom door asking his parents to turn on the computer. In his note, Alex blamed Robinhood for allowing him to take on the risk. “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,” the 29-page complaint reads.Īs we noted back in June, Alex Kearns left a note before his death. In the lawsuit, Dan and Dorothy Kearns also alleged that Robinhood purposely targets young inexperienced customers, then within the app pushes them to engage in highly complex trades. They also added that the Robinhood app did not “meaningful customer support” to resolve their son’s trade issues. They said that Robinhood’s business practices “directly” led to their son’s death. More than half a year later, Kearns’ parents are suing Robinhood Financial, claiming the free-trading app Robinhood should be held liable for wrongful death, negligent infliction of emotional distress, and unfair business practices. Before his death, Kearns said he lost hundreds of thousands of dollars on the free-trading app Robinhood.
Kearns who took his own life after he misunderstood a potential loss from a stock-options trade. Kearns later committed suicide after he saw a $730,000 negative balance in his Robinhood account. Back in June 2020, we wrote about a 20-year stock trader Alexander E.
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