Robinhood Settles With Family of Man Who Committed Suicide After App Falsely Showed Negative Balance

By Cassandra Fairbanks

The stock trading company Robinhood has settled with the family of a 20-year-old man who committed suicide last year after his account incorrectly showed a negative balance of $730,000.

Alex Kearns took his life in June, 2020.

On June 11, Robinhood restricted Kearns account and showed him a negative balance of $730,000. At 3:26 a.m. that evening, the company sent him an automated email demanding “immediate action” of paying over $170,000 in just a few days.

The debt was shown in error, however, and according to the family’s attorneys, Alex may not have lost money at all because of the way his options bets were structured, CBS News reported in February.

Kearns emailed the support address at Robinhood three times that evening and the next morning. He asked for help to understand what happened and if he could offset losses with another trade. The company had no customer service phone number listed, and he could not reach anyone for help.

He wrote in one email, “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?”

All he received was an automated message that read “thanks for reaching out to our support team! We wanted to let you know that we’re working to get back to you as soon as possible, but that our response time to you may be delayed.”

Later that day, believing that he has destroyed his entire future, Kearns took his own life.

The following day, Robinhood sent him an email letting him know that the trade was resolved and he was not in debt with them.

“Great news!” The email read, “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 February, his family sued the company for wrongful death, negligent infliction of emotional stress and unfair business practices, according to their S-1 filing that was released on Thursday. Robinhood settled, but the terms were not listed in the filing.

The Daily Caller reports that the Financial Industry Regulatory Authority (FINRA), a private Wall Street regulator, cited Kearns’ suicide in a statement Wednesday announcing a $70 million penalty on Robinhood.

“In determining the appropriate sanctions, FINRA considered the widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm,” FINRA said in the statement.

Robinhood must pay $12.6 million in restitution to other customers who had also been shown incorrect account balances.

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8 responses to “Robinhood Settles With Family of Man Who Committed Suicide After App Falsely Showed Negative Balance”

  1. KermodeBear says:

    While it’s unfortunate the man took his life, I don’t see how RobinHood should be liable here. It was a mistake; he contacted support; they said they would look into the situation. Sometimes mistakes and bugs happen.

    All he had to do was wait a few days for the problem to be resolved. I find it hard to blame RobinHood when he likely had other unrelated issues.

  2. Kino_Kova says:

    Wow just saw the video Mr Ballen did on this story a few weeks ago. My thoughts and prayers for the family.

  3. ssullivan says:

    Nowhere does it say his family received $70 million. Robin hood was assessed a FINE of $70 mil and has to $12.6 million restitution to an unspecified number of victims. It could be divided between 1000 people or 3. We dont know.
    The settlement amount with the family was not disclosed.

  4. KDiddy says:

    You’d have to know how Robin Hood was handling these errors they kept showing people. My guess is that it wasn’t from lack of support personnel. It was probably found that they were purposefully doing it or not taking care of it or whatever. Negligence and bad business practices. You can’t demand payment upwards of $170k in a given amount of time and then not answer the phone. That like some mafia type deal. People still use the app. It’s not like the stonks debacle stopped people from handing more money over to the knuckleheads who run Robin Hood. It boggles my mind.

  5. UppityG says:

    @Smitherine, this has been true of human society since the dawn of bartering. When the breadwinner of a family fears he has doomed his clan to abject poverty or worse, the pain can be unbearable. It’s not money that ruins lives, money is what makes everything run, including day to day family life. It’s the over-prizing of money to the point of amassing wealth well beyond what a family can humanly spend in its lifetime that causes problems. Moderation in all things, wealth included.

  6. Smitherine says:

    I mean it just shows the state of society that literally money runs peoples life. This is very sad.

  7. TruePatriot says:

    Yeah but if he had waited his family would have been out $70 million.. 🤷‍♂️

  8. Feddy_Von_Wigglestein says:

    I mean the guy should have at least waited for a God damn response first. Hard to feel bad.