![]() ![]() ![]() As of March 2022, Robinhood had 22.8 million funded accounts and 15.9 million monthly active users. The company's revenue comes from three main sources: interest earned on customers' cash balances, selling order information to high-frequency traders and margin lending. Securities and Exchange Commission, and is a member of the Securities Investor Protection Corporation. ![]() Robinhood is a FINRA-regulated broker-dealer, registered with the U.S. is an American financial services company headquartered in Menlo Park, California, that facilitates commission-free trades of stocks, exchange-traded funds and cryptocurrencies as well as individual retirement accounts via a mobile app introduced in March 2015. Robinhood also changed its system to escalate emailed support requests from some options traders.Robinhood Markets, Inc. Robinhood said this week that its changes include new financial criteria and revised experience requirements for new customers seeking to trade advanced options strategies and plans to expand that to other use cases. “How was a 20-year-old with no income able to get assigned almost $1 million worth of leverage,” the note said, according to the lawsuit, adding that these were his last known written words.Īfter Kearns’ death, Robinhood’s co-founders wrote that they were “personally devastated by this tragedy” and promised to make improvements to its app. “This resulted in a highly distressed mental condition in Alex, an uncontrollable impulse to commit suicide as the only option he could see,” they said.īefore taking his own life, Kearns left a note that signaled his confusion. The family pinned the blame for Kearns’ panic squarely on Robinhood. “Robinhood never bothered to explain this to Alex or respond to his increasingly desperate pleas for help,” the lawsuit said. ![]() His panic and desperation grew as he was unable to communicate over a number of hours with anyone at Robinhood,” the lawsuit said, adding that he repeatedly tried and failed to reach out to representatives at the company.Īdding to the tragedy, Kearns didn’t realize his massive negative balance would have been erased by the exercise and settlement of options he held, the lawsuit said. His Robinhood account reflected a negative cash balance in the amount of $730,000 - far more money than he had, the lawsuit said. Kearns, who started using Robinhood when he was a senior in high school, died by suicide in June after placing an options spread trade containing a risk “Alex did not understand,” according to the lawsuit. “We remain committed to making Robinhood a place to learn and invest responsibly.” “We were devastated by Alex Kearns’ death,” Robinhood said. In a statement, Robinhood explained it has made a series of improvements to its options offering, including by providing guidance to help customers, updates on how it displays buying power and live voice support for customers with open options positions. Robinhood sparked outrage last month by temporarily suspending purchases of GameStop - a controversial step that prompted Congress to schedule hearings. Those risks have been further magnified recently with the rise and fall of GameStop, which was catapulted by an army of traders on Reddit. The tragedy illustrated the potential dangers of the free-trading boom set off in large part by Robinhood, which has enjoyed explosive growth during the pandemic. “Tragically, Robinhood’s communications were completely misleading because, in reality, Alex did not owe any money,” the lawsuit said. The damages they are seeking will be determined at a later date. In addition to wrongful death, the complaint filed by the Illinois family accuses Robinhood of negligent infliction of emotional stress and unfair business practices. “Robinhood built out its trading platform to look much like a videogame to attract young users and minimize the appearance of real-world risk,” reads the lawsuit filed Monday in California by Kearns’ parents Dan and Dorothy and sister Sydney. The parents and sister of Alexander Kearns accused Robinhood of luring inexperienced investors like their son to take big risks in sophisticated financial instruments such as the options trading he engaged in - without providing the necessary customer support and investment guidance. Robinhood is being sued for the wrongful death of a 20-year-old college student who died by suicide last summer after he saw a negative balance of $730,000 in his trading account and mistakenly believed that was the sum of money he owed. ![]()
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