Monday, April 5, 2021

Robinhood sued by parents of trader who took his life

Robinhood sued by parents of trader who took his life

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In June, Robinhood emailed Kearns notifying him he needed to deposit about $178,000 to help rectify a negative balance, which the app showed was roughly $730,000, according to the complaint. The company didn’t tell Kearns that he held options in his account that more than covered his obligation, and the negative balance would have been erased by the exercise and settlement of the puts he held, according to the complaint.

Kearns wasn’t able to connect with anyone at Robinhood that night to find out what was going on. He panicked and rode to a railroad crossing on his bicycle and ran in front of an oncoming train, according to the complaint.

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“We were devastated by Alex Kearns’ death,” Robinhood said in a statement. “Since June, we’ve made improvements to our options offering. These include adding the ability to exercise contracts in the app, guidance to help customers through early assignment, updates to how we display buying power, more educational materials on options, and new financial criteria and revised experience requirements for new customers seeking to trade Level 3 options.”

The company said that it added, in early December, live voice support for customers with an open options position or recent expiration.

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