A 20-year-old college sophomore who had been trading on Robinhood apparently killed himself after believing he’d run up huge losses trading options, according to published reports.
The Naperville, Ill. man, identified as Alex Kearns, reportedly believed he had a negative cash balance of $730,165 but may simply have not understood the financial statement, CNBC reported, citing a family relative.
Robinhood has seen its popularity surge in recent months with a reported 10 million users, up from 1 million in 2016. The privately held company raised $280 million in a series F funding round led by Sequoia Capital in May, giving it a valuation of $8.3 billion.
Kearns’ body was found last week beside some railroad tracks in nearby Plainfield, Ill. CNBC reported that a note left for his family said Robinhood had allowed him to take on far too much risk. “How was a 20-year-old with no income able to get assigned almost a million dollars worth of leverage?” the note said, according to the report.
However, the negative $730,000 amount may just have been the other side of an options trade that hadn’t settled yet, according to the report.
Bill Brewster, an analyst at Sullimar Capital who is related to Kearns by marriage, said Robinhood should change how it displays information. “When you’re dealing with retail money and actively soliciting traders under 30 years old, to have errors like this is inexcusable and at the minimum negligence,” he told CNBC.
Robinhood told the network it is reviewing its options product “to determine if any changes may be appropriate.”