Nebraska college student, 20, commits suicide after 'glitch' on online trading platform Robinhood showed a negative $730,000 cash balance in his account
www.dailymail.co.uk
www.forbes.com
A college student has committed suicide after seeing a negative cash balance of $730,165 in his account on the Robinhood stock trading app.
Alexander E. Kearns, 20, died on Friday after apparently hurling himself in front of an oncoming freight train in his home town of Naperville, Illinois.
Kearns, a University of Nebraska student who was home on break, left a heartbreaking suicide note, part of which was published online by his cousin-in-law Bill Brewster.
'How was a 20 year old with no income able to get assigned almost a million dollar's worth of leverage?' the note reads. 'A painful lesson. F**k Robinhood.'
Although the details of Kearns' trades have not been made public, there is reason to believe that his negative account balance was merely a temporary glitch, and he was not in fact $730,000 in debt as he believed.
From his note, Kearns appears to have been using what's known as a 'bull put spread,' a strategy that limits risk for a trader by both buying and selling put options at different strike prices.
It's likely that the negative balance appeared in Kearns' account only temporarily, as one half of the trade settled before the other did.
Robinhood did not immediately respond to a request for comment from DailyMail.com, but told Forbes: 'All of us at Robinhood are deeply saddened to hear this terrible news and we reached out to share our condolences with the family over the weekend.'
The company declined to share details of Kearns' trades, citing privacy concerns.
According to his family, Kearns had only recently started trading as an antidote to boredom during the pandemic, and was enthusiastic as he learned more about the markets and different trading strategies.
'When he saw that $730,000 number as a negative, he thought that he had blown up his entire future,' Brewster told Forbes. 'I mean this is a kid that when he was younger was so conscious about savings.'
Brewster shared the painful details of Kearns' death on Twitter, hoping to educate the public and push Robinhood to make changes to its interface to avoid future tragedy.
'Tragically, I don't even think he made that big of a mistake. This is an interface issue, they have slick interfaces. Confetti popping everywhere,' Brewster told Forbes, referring to the shower of colorful confetti Robinhood displays when cash is deposited into an account.
'They try to gamify trading and couch it as investment,' he said.
Since launching in 2013, Robinhood has exploded in popularity, attracting 13 million users with a median age of 31.
The app, which is commission-free, has pushed traditional brokerages such as Charles Shwab and Merrill Lynch to offer free online trading in order to compete.
Robinhood and similar offerings make it easy to get involved in trading options, which are agreements to buy or sell blocks of stock at a certain price by a certain date.
- Alexander E. Kearns, 20, was struck by a train on Friday in Naperville, Illinois
- He left a suicide note explaining that he'd been financially devastated
- Screenshot of his Robinhood account shows negative balance of $730,000
- However, this was likely a temporary glitch before his options contracts settled
- Robinhood has attracted millions of young traders with little experience
- It offers easy trading of stock options, which can be complex and risky
Student, 20, commits suicide after seeing -$730K Robinhood balance
Alexander E. Kearns, 20, died on Friday after apparently hurling himself in front of an oncoming freight train in his home town of Naperville, Illinois.
20-Year-Old Robinhood Customer Dies By Suicide After Seeing A $730,000 Negative Balance
Amid the wave of newcomers to what has become a casino stock market, a novice options trader takes his own life.
www.forbes.com
A college student has committed suicide after seeing a negative cash balance of $730,165 in his account on the Robinhood stock trading app.
Alexander E. Kearns, 20, died on Friday after apparently hurling himself in front of an oncoming freight train in his home town of Naperville, Illinois.
Kearns, a University of Nebraska student who was home on break, left a heartbreaking suicide note, part of which was published online by his cousin-in-law Bill Brewster.
'How was a 20 year old with no income able to get assigned almost a million dollar's worth of leverage?' the note reads. 'A painful lesson. F**k Robinhood.'
Although the details of Kearns' trades have not been made public, there is reason to believe that his negative account balance was merely a temporary glitch, and he was not in fact $730,000 in debt as he believed.
From his note, Kearns appears to have been using what's known as a 'bull put spread,' a strategy that limits risk for a trader by both buying and selling put options at different strike prices.
It's likely that the negative balance appeared in Kearns' account only temporarily, as one half of the trade settled before the other did.
Robinhood did not immediately respond to a request for comment from DailyMail.com, but told Forbes: 'All of us at Robinhood are deeply saddened to hear this terrible news and we reached out to share our condolences with the family over the weekend.'
The company declined to share details of Kearns' trades, citing privacy concerns.
According to his family, Kearns had only recently started trading as an antidote to boredom during the pandemic, and was enthusiastic as he learned more about the markets and different trading strategies.
'When he saw that $730,000 number as a negative, he thought that he had blown up his entire future,' Brewster told Forbes. 'I mean this is a kid that when he was younger was so conscious about savings.'
Brewster shared the painful details of Kearns' death on Twitter, hoping to educate the public and push Robinhood to make changes to its interface to avoid future tragedy.
'Tragically, I don't even think he made that big of a mistake. This is an interface issue, they have slick interfaces. Confetti popping everywhere,' Brewster told Forbes, referring to the shower of colorful confetti Robinhood displays when cash is deposited into an account.
'They try to gamify trading and couch it as investment,' he said.
Since launching in 2013, Robinhood has exploded in popularity, attracting 13 million users with a median age of 31.
The app, which is commission-free, has pushed traditional brokerages such as Charles Shwab and Merrill Lynch to offer free online trading in order to compete.
Robinhood and similar offerings make it easy to get involved in trading options, which are agreements to buy or sell blocks of stock at a certain price by a certain date.
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