The parents of a 20-year-old who died by suicide after thinking he lost thousands on Robinhood are suing the app
- Alexander Kearns died by suicide in June 2020, and his parents say Robinhood is partially to blame.
- Kearns' parents are filing a wrongful death lawsuit against Robinhood on Monday.
- They say the app targets young customers and encourages them to engage in risky trading.
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The family of a 20-year-old who died by suicide after thinking he lost $730,000 on Robinhood last year is suing the stock-trading app, accusing it of wrongful death.
Alexander Kearns died by suicide on June 12, 2020.
While it's unclear why Kearns died by suicide, the 20-year-old parent's say in their lawsuit being filed on Monday that they believe Robinhood's response to his supposed loss of funds played a factor in his death.
According to the lawsuit, seen by CBS News, Dan and Dorothy Kearns say Robinhood targets young customers, encourages them to engage in risky trading, and offers no "meaningful customer support" to investors who need help.
Dan and Dorothy Kearns told CBS News that their son had been trading on Robinhood since before he graduated high school, and had been approved to buy and sell complex options trades, which can leave temporary balances and debts while settling over several trading days.
On the day Kearns died, his Robinhood account had been restricted and showed a negative $730,000 cash balance.
After realizing the debt, Kearns emailed Robinhood and asked for help in understanding the losses, saying: "I was incorrectly assigned more money than I should have, my bought puts should have covered the puts I sold. Could someone please look into this?"
CBS News reports that Robinhood responded with an automated message saying the company was "working to get back" to Kearns.
The day after Kearns died, Robinhood sent Kearns an email saying: "Great news! 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!"
In a note to his parents before he died seen by CBS News, Kearns questioned why he was assigned "almost $1 million worth of leverage," and said he had "no clue" what he was doing.
Dan and Dorothy Kearns told CBS News that if a Robinhood customer service agent had helped their son with his questions, he may still be alive.
In their lawsuit, Dan and Dorothy Kearns say Robinhood "must be held accountable" for their son's death.
"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" Benjamin Blakeman, one of the Kearns family attorneys, told CBS News. "That could panic just about anybody."
In a statement to Insider, a Robinhood spokesperson said the company had made improvements to its options offerings since Kearns died.
The spokesperson said the improvements include adding the ability to exercise contracts in the app, guiding customers through early assignments, updating buying buying power displays, offering further education materials, and furthering its financial and experience criteria for options.
"We were devastated by Alex Kearns' death," the spokesperson said. "In early December, we also added live voice support for customers with an open options position or recent expiration, and plan to expand to other use cases. We also changed our protocol to escalate customers who email us for help with exercise and early assignment. We remain committed to making Robinhood a place to learn and invest responsibly."
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