Family Sues Trading App Robinhood over Suicide

A college student's family who killed themselves after thinking that they had lost a fortune using Robinhood sued the free trading app on Monday.

A message left behind by Alex Kearns asked how, according to the suit filed in Silicon Valley, where the app is based, a 20-year-old with no income could get access to nearly $1 million of financial leverage using Robinhood, reports AFP.

“Robinhood’s website entices young, inexperienced users,” the suit contends.

“By marketing its online trading platform like a video game, it implied that trading stock and options was a fun way to make money, perhaps even to get rich.”

The suit accuses Robinhood, along with unfair business practices, of causing the Illinois man's death and asks for unspecified damages.

Robinhood said it was "devastated" by Kearns' death last June in response to an AFP query and has since enhanced trading features along with user guidance and education features.

“We remain committed to making Robinhood a place to learn and invest responsibly,” a spokesperson said.

Kearns was in his final year of high school when he opened a Robinhood account, according to the suit.

He used the app to start trading options in his freshman year of college, and a series of trades resulted in him finding his account was $730,000 in the red, the suit detailed.

“Tragically, Robinhood’s communications were completely misleading, because, in reality, Alex did not owe any money,” the lawsuit contended.

“He held options in his account that more than covered his obligation.”

The suit comes after traders who banded together in recent weeks over Reddit and other social media platforms used Robinhood to make massive share purchases of GameStop, AMC Entertainment and other struggling businesses against which rich investors had bet.

The campaign, intended to make hedge funds and other large investors suffer, caused the share prices of these companies to soar, and caught the attention securities regulators.

An app popular among retail investors whose stated goal is to “democratize finance for all,” Robinhood at one point limited trades on the most volatile stocks, before reversing course the next day.