Alexander Kearns, a 20-year-old college student. (kearns Family file photo)
Alexander Kearns, a 20-year-old college student in the western suburbs of Chicagoland, used the investment application Robinhood to open an options trading account, resulting in a loss of $730,000. The company was accused of luring inexperienced investors into high-risk and complex investments, which led to a regrettable incident.
The App has recently become the most popular investment app for many newcomers to the stock market, with over 10 million users and no fees as its biggest selling point.
The Parents accused Robin Hood of luring inexperienced investors like their son into taking high risks with responsible financial instruments, such as their son’s choice of futures trading, without providing the necessary customer service and investment guidance.
The suit states that “Robin Hood” made its trading platform look like a video game to attract young users and minimize the realistic risks they might encounter.
The suit states that Zions, who has been using Robin Hood since his last year of high school, purchased options last summer that resulted in a $730,000 loss in his account, “and he went into a complete panic and spent the next several hours trying to contact a Robin Hood representative, all of which failed.
The worst part was that he didn’t realize that the negative $730,000 cash balance he was seeing was not a reflection of the value of the user’s investments or debt, but rather a temporary negative cash balance due to a complex options transaction, when in fact he still had $16,000 in his account.
Zions’ parents said that “Robin Hood” never explained this to their son, nor did he respond to his desperate pleas for help, which in turn led to his extreme distress and even uncontrollable belief that suicide was the only option.
A day after his death, Robin Hood finally sent him an email stating that he was not in debt and that the amount was only a temporary indication.
Robin Hood said the company was saddened by the incident and is currently reviewing the option trading product to see if any changes need to be made.
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