Getty Traders work during the opening bell at the New York Stock Exchange (NYSE) on March 16, 2020 at Wall Street in New York City.
A Nebraska college student died by suicide last week after confusion over a negative account balance on a popular investing app — which showed more than $700,000 in the red.
A sophomore at the University of Nebraska at Lincoln, Alexander Kearns died on June 12 at his parent’s home in Naperville, Illinois, according to his obituary and CNBC.
The 20-year-old was found dead less than 24 hours after checking his balance on Robinhood, an app that enables users to invest in stocks and offers “unlimited commission-free trades,” the news outlet reported.
Kearns blamed Robinhood for allowing him to accrue a negative cash balance of $730,165 — but hat might not have actually been the case, a family member told CNN.
“The kid threw himself in front of a train over nothing, because a tech company can’t figure out they shouldn’t show a negative $730,000 cash balance to a 20-year-old kid,” Bill Brewster, Kearns’ cousin-in-law, said to CNN Business.
While the company can’t disclose details surrounding the student’s account, a spokesperson told PEOPLE Magazine they are “deeply saddened” by the news.
“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 statement read. “We will not share any details regarding the account to respect privacy and confidentiality.”
The magazine reported that Kearns had a “keen interest in markets and the economy” and began experimenting with the app during the COVID-19 pandemic.
Brewster took to Twitter to express his concern over the risks for first-time investors relating to the free-trading boom and easy access to complicated trading instruments like options.
But here’s the truth. AND PLEASE PAY ATTENTION TO THIS IF YOU’RE YOUNG.
The markets are bananas right now. It’s not the time for amateurs. Really really pay attention to position sizing. Stay away from exotic instruments like options and futures.
“If you’re reading this, then I am dead.”
A yellow sticky note instructed Kearns’ father to turn on his son’s computer, CNBC reported. The message, “If you’re reading this, then I am dead,” then flashed across the screen.
Kearns’ note recounts the 20-year-old’s desperation over his alarming account balance, according to a screenshot posted to Brewster’s Twitter. He blamed Robinhood for throwing him for a loop and allowing him to pile on too much risk, the note continued.
To the media – This is paragraph 1 of the suicide note. It’s part of the public domain. Quote away.
If you’d like verification, the family will provide that.
“How was a 20 year old with no income able to get assigned almost a million dollar’s worth of leverage?” Kearns wrote. “The puts I bought/sold should have canceled out, too, but I also have no clue what I was doing now in hindsight.”
Adding, “There was no intention to be assigned this much and take this much risk, and I only thought that I was risking the money that I actually owned. If you check the app, the margin investing option isn’t even ‘turned on’ for me. A painful lesson. F— Robinhood.”
Kearns’ body was found on Friday, Plainfield Illinois Fire Department Chief, Jon Stratton told CNBC. He was studying management and had a growing interest in financial markets, the outlet added.
Brewster Says the Balance May Have Only Been ‘Temporary ‘
I saw @RobinhoodApp response and can confirm they did reach out. The family isn’t ready to speak yet. Since they can’t release account details here’s the screenshot.
Brewster, who is an analyst at Sullimar Capital, told PEOPLE Magazine that he believes the financial statement may have actually represented “his temporary balance until the stocks underlying his assigned options actually settled into his account.”
He said he received a wave of responses on Twitter suggesting the issue stems from the app’s confusing user interface.
“When he saw that $730,000 number as a negative, he thought that he had blown up his entire future,” Brewster said to Forbes.
Kearns was potentially involved in a “bull put spread,” Forbes reported, which “involves selling put options at a higher strike price, and buying puts at a lower strike price, both with the same expiration.”
A screenshot of Kearns’ phone shows a negative cash balance of $730,165 displayed in red. Forbes said the number might “not have represented uncollateralized indebtedness at all,” but just a temporary statement to fill the slot until his underlying stocks assigned to options settled.
Robinhood is Pledging to Make ‘Adjustments’
GettyCo-founder and co-CEO of Robinhood Vladimir Tenev (L) and founder and CEO of Betterment Jon Stein speak onstage during TechCrunch Disrupt NY 2016 at Brooklyn Cruise Terminal on May 10, 2016 in New York City.
The company’s founders released a statement on June 19 promising to expand the platform’s educational resources, upgrade its user interface and tighten criteria for eligibility.
Co-founders Vlad Tenev and Baiju Bhatt wrote on their website that they were “personally devastated by this tragedy” and do not take their responsibility lightly.
“It is not lost upon us that our company and our service have become synonymous with retail investing in America, and that this has led to millions of new investors making their first investments through Robinhood,” they expressed. “We recognize this profound responsibility, and we don’t take it lightly. Our aspiration is to innovate, lead, and go beyond the status quo.”
The pair pledged to add tougher criteria and better educational outlets in order to ensure that customers can fully grasp the app’s nature the dynamic of trades.
Robinhood, which added more than 3 million users in the first quarter of 2020, according to CNN, is also working to change the way its buying power is displayed on the user interface.
Lastly, the free-trading app will donate $250,000 to the American Foundation for Suicide Prevention, the company statement confirmed.
If you or someone you know is considering suicide, please contact the National Suicide Prevention Lifeline at 1-800-273-TALK (8255), text “STRENGTH” to the Crisis Text Line at 741-741 or go to suicidepreventionlifeline.org.
READ NEXT: Federal Judge Denies Trump Administration’s Request to Block John Bolton’s Memoir