Apparent suicide by 20-year-old Robinhood trader who saw a negative $730,000 balance prompts app to make changes (CNN)

[entremet]

Tragic.

The family of a 20-year-old student says he died by suicide after confusion over an apparent negative balance of $730,000 on his Robinhood account. Now they are demanding answers from the millennial-focused trading app.

Alexander Kearns, who was using Robinhood to trade complex options instruments, was found dead on June 12, according to local authorities in Plainfield, Illinois. His death is being treated as a suicide, according to the family and Robinhood. It isn't clear what factors contributed to his death.

The tragedy has drawn attention to the potential dangers of the free-trading boom inspired by Robinhood, which has given young, first-time investors easy access to exotic financial instruments typically used by sophisticated investors.

The Kearns family believes Alexander was misled by the app's interface suggesting he owed $730,000, when that was not really the case.

Click to shrink...

Apparent suicide by 20-year-old Robinhood trader who saw a negative $730,000 balance prompts app to make changes | CNN Business

The family of a 20-year-old student says he died by suicide after confusion over an apparent negative balance of $730,000 on his Robinhood account. Now they are demanding answers from the millennial-focused trading app.

www.cnn.com

 

[Dalek]

Holy cow that's a pretty staggering figure.

 

[GYODX]

They really should make it harder for people who have no idea what they're doing to opt-in to options trading.

 

[VeryHighlander]

I know people that have downgraded their entire lifestyles to make "gains" on this app. I don't know shit about stocks but all I know is that offloading your shit on OfferUp to fuel your quest for money sounds a lot like gambling to me. Online poker is harder to play than this shit, and as far as I know they'll accept anyone and everyone as long as they have a working debit card and ID.

 

[Zom]

Damn thats fucking tragic, but who just comits suicide for that?, I understand the shock, but straight to suicide?

 

[entremet]

Holy cow that's a pretty staggering figure.

Click to shrink...

Options are tricky. I don't mess with them as I know nothing about them. But Robinhood is making changes to its interface and alerts due to this obviously.

They're also doing more with investor education. To be clear, he didn't owe that money. His apparently misunderstood the values.

 

[Heromanz]

Damn thats fucking tragic, but who just comits suicide for that?, I understand the shock, but straight to suicide?

Click to shrink...

This aint it Chief

 

[Disclaimer]

Jesus, tragic indeed — that's terrible. What the hell sort of UI mistakenly conveys such a loss, and what did it actually mean?

 

[HotHamBoy]

Damn thats fucking tragic, but who just comits suicide for that?, I understand the shock, but straight to suicide?

Click to shrink...

Someone who Is probably already mentally/emotionally distressed or unwell

 

[PowerThroughLov]

Everyone should be investing. Even just $100.
You should just buy a vanguard fund like VTI and never look at it. Just keep putting spare $100 in for 20 years. Enjoy your gains when you need them.
Don't buy options.

 

[VeryHighlander]

Everyone should be investing. Even just $100.
You should just buy a vanguard fund like VTI and never look at it. Just keep putting spare $100 in for 20 years. Enjoy your gains when you need them.
Don't buy options.

Click to shrink...

Wow thanks for the advice this is the perfect time and place

 

[Syriel]

Options are tricky. I don't mess with them as I know nothing about them. But Robinhood is making changes to its interface and alerts due to this obviously.

They're also doing more with investor education. To be clear, he didn't owe that money. His apparently misunderstood the values.

Click to shrink...

Yes. This is a case of the app giving accurate information (what an investor would want) about a trade that had not fully settled.

It is one of the reasons why there is an argument to restrict complex trading to high net worth individuals.

The flipside of that tho (and why Robinhood exists) is that if you block the average investor you also block them from the gains.

 

[HotHamBoy]

Everyone should be investing. Even just $100.
You should just buy a vanguard fund like VTI and never look at it. Just keep putting spare $100 in for 20 years. Enjoy your gains when you need them.
Don't buy options.

Click to shrink...

 

[entremet]

Damn thats fucking tragic, but who just comits suicide for that?, I understand the shock, but straight to suicide?

Click to shrink...

Could've been anxiety.

If he thought he owned close to a million dollars, imagine explaining that to your parents? Anxiety is a bitch. You don't think straight.

Obviously, not trying to psychoanalyze the poor kid, but I can understand the overwhelm of panic when you think you've made a huge mistake.

 

[SkimpyMcChicken]

Wow thanks for the advice this is the perfect time and place

Click to shrink...

He didn't say anything wrong? He wasn't insensitive to the boy that died. He provided a much safer alternative over options trading?

This was exactly the perfect time to say that

 

[GYODX]

Everyone should be investing. Even just $100.
You should just buy a vanguard fund like VTI and never look at it. Just keep putting spare $100 in for 20 years. Enjoy your gains when you need them.
Don't buy options.

Click to shrink...

I would advocate for taking advantaged of any tax-advantaged retirement accounts at your disposal *before* investing in taxable accounts.

 

[sersteven]

Robinhood is really popular especially over in Reddit/in social media circles. It's gamified day trading for the internet generation. It's become a huge joke where they have places like /r/wallstreetbets where its just full of people (who all seem young) playing with options and tons of people purchasing hundreds of put/call contracts for memes.

It's scary, seen posts of dudes buying stuff they don't even understand, people getting trapped with contracts and end up in deep red. I really hope they do an effort to stop that kinda stuff from gaining even more traction. You don't even need to look far.

 

[nitewulf]

That's tragic and any get rich quick type apps are just not good IMO.

 

[entremet]

These apps are growing like crazy due to the economic downturn. Many put their stimulus checks in the market.

That's tragic and any get rich quick type apps are just not good IMO.

Click to shrink...

It's really not a get rich app. It's just a brokerage. They are highly regulated as well. The issue is the same as the stock market. You can a Warren Buffett approach of patience or you can do risky stuff like day trading. It depends on the person.

Also, you can use the Cash app to buy stocks now.

 

[Syriel]

Jesus, tragic indeed — that's terrible. What the hell sort of UI mistakenly conveys such a loss, and what did it actually mean?

Click to shrink...

The simplified answer is that half of a complex trade had finished, but the other half hadn't yet settled.

You usually use options to limit exposure, with competing positions that cap both upside and downside.

So it was accurate, but a temporary situation.

 

[nitewulf]

These apps are growing like crazy due to the economic downturn. Many put their stimulus checks in the market.



It's really not a get rich app. It's just a brokerage. They are highly regulated as well. The issue is the same as the stock market. You can a Warren Buffett approach of patience or you can do risky stuff like day trading. It depends on the person.

Click to shrink...

I know....I was trying to be nuanced. I don't want to blame the victim here. But inexperienced folks shouldn't be trading exotic products. It takes experience and education to understand these things. To young folks this may seem like a quick way to make money, just like the cryptocurrency boom.

 

[skeezx]

That's tragic and any get rich quick type apps are just not good IMO.

Click to shrink...

investing =/= get rich quick. braindead/mostly uninhibited tinder swipe investing problematic but not "bad"

 

[GYODX]

These apps are growing like crazy due to the economic downturn. Many put their stimulus checks in the market.



It's really not a get rich app. It's just a brokerage. They are highly regulated as well. The issue is the same as the stock market. You can a Warren Buffett approach of patience or you can do risky stuff like day trading. It depends on the person.

Also, you can use the Cash app to buy stocks now.

Click to shrink...

That's not too bad. What's worse are the idiots taking out student loans and then blowing it on options. It's just unbelievably bad decision-making.

 

[Quality Garbage]

Damn thats fucking tragic, but who just comits suicide for that?, I understand the shock, but straight to suicide?

Click to shrink...

A 20 year old with almost zero adult life experience that lacked the tools and composure to act rationale under duress.

 

[FeD]

These apps are growing like crazy due to the economic downturn. Many put their stimulus checks in the market.



It's really not a get rich app. It's just a brokerage. They are highly regulated as well. The issue is the same as the stock market. You can a Warren Buffett approach of patience or you can do risky stuff like day trading. It depends on the person.

Also, you can use the Cash app to buy stocks now.

Click to shrink...

Robinhood has had its sketchy dealings though, outages at weird times, users manipulating and finding gaps in the system. It might be highly regulated but for something that's supposedly is there is some strange stuff going on at times.

 

[Dyle]

Robinhood is another sad example of the libertarian dystopia of the modern tech industry. I'm sure he hasn't been the only one and won't be the last.

 

[samoyed]

Crossposting my comments from the stock watch thread.

The kid did not have a -$700,000 loss, he probably had a few thousand at most and RH displayed it wrong cause RH sucks. He likely did not truly understand his position's risk profile and assumed he messed up somewhere.

Poor guy, killed himself over a UI fuckup.

The article says this though, below. That can't be right, surely?

"Robinhood does not support uncovered option selling."

Click to shrink...

His position was covered, but the balance display showed his hypothetical uncovered loss cause RH is really bad at calculating option spreads.

Click to shrink...

One of the problems here is, in order to make stonks fun and easy for that millennial audience, RH hides a lot of things from you and only has the barest of restrictions. They want you to trade often and get you addicted like a video game, it's their business model.

In his final note, seen by Forbes, Kearns insisted that he never authorized margin trading and was shocked to find his small account could rack up such an apparent loss.

Click to shrink...

This is plain wrong. Under the hood, all vanilla RH accounts are margin accounts, except for accounts you specifically downgrade to cash by contacting them. The thing they advertise as "margin" in RH gold is something else. All brokerage accounts need margin to trade spreads or level 2 options, this is a FINRA thing IIRC. So he was using margin and didn't realize it.

Click to shrink...

 

[entremet]

That's not too bad. What's worse are the idiots taking out student loans and then blowing it on options. It's just unbelievably bad decision-making.

Click to shrink...

Yeah, I have no issues with ppl putting their stimulus in the market. All I was saying is that these apps are seeing a lot of activities due to these scenarios.

 

[nitewulf]

investing =/= get rich quick. braindead/mostly uninhibited tinder swipe investing problematic but not "bad"

Click to shrink...

Yeah people should invest, but as can be seen from this very topic, not all types of investments are equal. Dont wanna derail further, we have the investments topic for that.

 

[Charcoal]

Not sure if it was the same guy, but didn't a similar thing happen and the guy recorded it?

He was expecting to make money but something happened and he lost like $50K instantly from an investment app.

 

[Fart Master]

Everyone should be investing. Even just $100.
You should just buy a vanguard fund like VTI and never look at it. Just keep putting spare $100 in for 20 years. Enjoy your gains when you need them.
Don't buy options.

Click to shrink...

Dude

 

[Yamajian]

Options are gambling, and it's extremely easy to lose thousands of dollars with zero to show for it in a quick amount of time. Anyone calling options "investing" is straight up misleading.

 

[entremet]

Not sure if it was the same guy, but didn't a similar thing happen and the guy recorded it?

He was expecting to make money but something happened and he lost like $50K instantly from an investment app.

Click to shrink...

I vaguely remember reading something like that.

It really is like the 1920s again weirdly enough. With all the suicides after the great crash of 1929

The 20s are a cursed decade lol.

 

[ape2man]

options are not that bad. just never fucking sell them. risk is finite when buying options. they can only end up being worthless.

 

[Chief Malik]

Damn thats fucking tragic, but who just comits suicide for that?, I understand the shock, but straight to suicide?

Click to shrink...

Plenty of people. Actually millionaires were jumping off bridges when the great depression hit

 

[Brinbe]

fuuuuuuuuuuuck that's tragic.

 

[Munroe]

Just to echo what other people have said, this is a combination of a UI issue and the poor guy not knowing how trading works. There's no way a student could invest at least $700,000 for it to then show a loss.

If he had known how trading works then if for example he invested a couple thousand but then the app showed a loss of 700k he would have questioned the app as being dodgy.

Companies should make these apps harder to get into maybe have some sort of quiz at the start that ensures they at least have basic knowledge

 

[Monsterqken]

He valued his life less than 730 k? That's depressing.
The Robin Hood name seems like a bad joke for an app that sends naive young people into massive debt (or in this case the appearance of debt).

 

[Nothing Loud]

Damn thats fucking tragic, but who just comits suicide for that?, I understand the shock, but straight to suicide?

Click to shrink...

someone with all-or-nothing thinking patterns, known as cognitive distortions, will think something like "I owe 730,000? Then my life is over and I must die"—something like that, when they see the negative balance on their app. Mental health therapy can help prevent young people from being tricked by this line of thinking.

 

[Clay]

Wow, you can trade options on Robin Hood?

 

[NinjaScooter]

Damn thats fucking tragic, but who just comits suicide for that?, I understand the shock, but straight to suicide?

Click to shrink...

Financial ruin (or in this case, perceived financial ruin) seems like a fairly common component in suicides. Weren't people jumping out of high rise buildings when the stock market crashed?

 

[Tsuyu]

Robinhood is predatory

 

[Deleted member 6949]

Everyone should be investing. Even just $100.
You should just buy a vanguard fund like VTI and never look at it. Just keep putting spare $100 in for 20 years. Enjoy your gains when you need them.
Don't buy options.

Click to shrink...

Nah, better return on scratch tickets, if you buy the expensive ones, and they might pay off before you die of Covid-19 because you are working part-time at a movie theater that is playing CHRISTOPHER NOLAN'S T E N E T and you don't get health insurance.

 

[Marshall]

I've heard that experienced investors prey on RH investors in pump and dumps daily.

 

[Virtua Saturn]

There is something so depressingly American about this. I feel bad. Your life is worth more than any cash value.

 

[Gray clouds]

The closest I came to suicide was seeing my student debt. I was terrified, and didn't know I had options. I just thought that was it. Everything was over.

God damn it, this poor kid. I wish he would called someone... Don't be alone in the darkness

 

[Bionic]

I vaguely remember reading something like that.

It really is like the 1920s again weirdly enough. With all the suicides after the great crash of 1929

The 20s are a cursed decade lol.

Click to shrink...

Just curious, what part were you laughing out loud about? Or was that using "lol" like a period?

 

[entremet]

Just curious, what part were you laughing out loud about? Or was that using "lol" like a period?

Click to shrink...

Im obviously not laughing at ppl killing themselves. Come on.

pretty obvious is about this apparent cursed year.

 

[samoyed]

Robinhood is predatory

Click to shrink...

RH is absolutely predatory. However one macro consequence of its popularity was disrupting the iron grip American's oligarchs had on the stock market, the same stock market that has been the largest system of wealth transfer from the bottom to the top for the last 70 or so years. In that sense it is not necessarily net negative. It is far less predatory than the IAP/freemium game industry since it gives users agency over their own finances, rather than just teaching them to gamble for jpegs of cute anime girls. Ironically, RH is just utilizing the same strategies honed and innovated in the IAP/freemium industry.

 

[Xando]

Dude

Click to shrink...

He is right tho