The day-trading explosion took a kick to the gut on Wednesday after it was revealed that a 20-year-old college student committed suicide after seeing a $730,000 negative balance on his Robinhood account.
University of Nebraska student Alexander Kearns stepped in front of an oncoming train on June 12 after leaving a suicide note detailing his shame and anger at finding the negative balance, Forbes reported on Wednesday.
“How was a 20-year-old with no income able to get assigned almost a million dollars worth of leverage?” read the note. In the note, which has been posted on Twitter by a relative, Kearns directs much of his anger at Robinhood, including by signing off with the phase, “F—k Robinood.”
But as Forbes later reported, Kearns had been trading options, not stocks, so the negative $730,000 balance appears likely to have been a temporary sum until the stocks tied to his options settled to his account.
News of the suicide comes amid a boom in trading by small investors hooked on free trading apps like Robinhood, which has led to a surge in demand for risky stocks, including Hertz and Chesapeake Energy, both of which have filed for bankruptcy.
Robinhood, popular with millennial traders, added three million new accounts to its platform recently as quarantined Americans switched from gambling on sports to stocks. Critics on Wednesday blasted the app and regulators for not better protecting newbie investors.
“Where the f—k was the SEC?? Where was FINRA?? This kid had no income and was granted a million $ in leverage!,” tweeted @apollotradingsd.
“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 Silicon Valley startup said.
The story of Kearns’ tragic demise started to come together on Twitter after a user named Bill Brewster kicked off a thread on June 13 about the death of a young relative bewildered by his Robinhood trading balance. Brewster, an analyst at Sullimar Capital in Chicago, has also provided a screenshot of Kearns’ Robinhood account online showing that Kearns was trading options, suggesting that the negative balance that sent him over the edge was temporary.
Kearns acknowledged his confusion in the suicide note, writing “The puts I bought/sold should have canceled out, too, but I also have no clue what I was doing now in hindsight.”