Alex Kearns took his own life on June 12. Now his parents are suing stock trading app Robinhood for the circumstances leading to his suicide.
A 20-year-old college student, waiting out the coronavirus pandemic with his family, killed himself under the mistaken impression that he had turned his roughly $5,000 savings into $730,000 in debt. Alex Kearns had come home from college early, to stay with his parents under quarantine, in what his father, Dan Kearns, called a “joyful household” despite the grim global situation at the time.
Dorothy Kearns remembered Alex, the “love of her life,” as the boy who would spend his evenings helping her in the kitchen. During one of those evenings, her son expressed both doubt and determination toward his future. “One night he says to me, he’s like, ‘Mom, I don’t — I don’t know what I want to do with my life yet. But I do know I want to help people,’” she remembered.
Alex wanted to try his hand as an investor in the stock market, and, like millions of others, chose to do so through a free app called “Robinhood,” whose stated mission is to “democratize finance” by providing a platform for anyone to trade without commissions or fees. As they said during their contentious Super Bowl ad: “You don’t need to become an investor; you were born one.”
At the time, Dan could not have anticipated the consequences of the experience. “I didn’t see the harm in doing that.” Dan Kearns said, explaining that he spoke with his son about the idea and understood he had “limited exposure.” What neither parent realized is that Robinhood had approved their son for options trading — a significantly more risky endeavor.
On June 11, Alex was alerted to restrictions on his account, due to what appeared to be a negative balanced of $730,000. The company sent him an automated e-mail demanding “immediate action,” and giving him just a few days to pay $170,000. “He thought he blew up his life. He thought he screwed up beyond repair,” Dan Kearns said.
Alex reached out to customer service with a simple plea for help. “I was incorrectly assigned more money than I should have, my bought puts should have covered the puts I sold,” he wrote. “Could someone please look into this?” The automated reply assigned him a case number, saying the response could be “delayed.” A few hours later, at 3:23 a.m. on June 12, the local sheriff arrived Dan and Dorothy’s residence to tell them their son was dead.
A day later, another automated e-mail arrived from Robinhood. “Great news!” it said, “We’re reaching out to confirm that you’ve met your margin call and we’ve lifted your trade restrictions. If you have any questions about your margin call, please feel free to reach out. We’re happy to help!”
The Kearns family has filed a wrongful death lawsuit against Robinhood, accusing them of both negligent infliction of emotional distress, and unfair business practices, along with a failure to provide “meaningful customer support” they believe could have saved their son from the despair that motivated him to take his own life.
“The information they gave him was just incredibly skewed. And possibly completely wrong, because they make it look like you owe $730,000 when you really don’t owe anything,” said Benjamin Blakeman, a Kearns family attorneys. “That could panic just about anybody.” Worse, “they provide no mechanism through a telephone call, through live email service, to get live answers to questions,” fellow Kearns family attorney Ethan Brown said.
William Galvin, Massachusetts secretary of the commonwealth and the chief financial regulator in the state of Massachusetts, is also eyeing Robinhood, as well as other apps for amateur investors. He believes situations like the one leading to Alex’s suicide point to a need for better regulation.
“I think it demands some sort of national standard for this behavior,” he said. “There was a very deliberate effort on the part of Robinhood to particularly entice younger, inexperienced investors.” His office filed a formal complaint against Robinhood in December. “They have not acted in the best interests of their customers. So the idea that they’re caring for the poor,” he said, “is simply not true.”
For Alex, any justice will come too late. Dan believes his son was trying to save his family from “what he thought was impending financial disaster” and simply needed “a little help.” He said his son mistakenly believed “he blew up his life” and he had “screwed up beyond repair.”
The family is still reeling from the loss. “I lost the love of my life. I miss him more than anything,” Dorothy said. “I can’t tell you how incredibly painful it is. It’s the kind of pain that I don’t think should be humanly possible for a parent to overcome.”