Investing app Robinhood settled a wrongful death lawsuit with the family of a trader who committed suicide, the company revealed Thursday in IPO filings.
Alex Kearns, a twenty-year-old college student, and trader committed suicide in June 2020 after his Robinhood account mistakenly showed a negative balance of $730,000, CBS News reported.
Robinhood sent Kearns an email demanding he pays more than $170,000 within a few days. Kearns tried to contact customer service and was unsuccessful, that’s when he took his own life.
Robinhood had sent Kearns an email a day after he committed suicide informing him he no longer owed money, according to CBS.
“I don’t understand how they allowed that to happen in the first place,” Dan Kearns, Alex’s father, told CBS.
“We don’t want another family to go through this,” said his mother, Dorothy Kearns.
The Kearns family filed a lawsuit in February accusing Robinhood of wrongful death, negligent infliction of emotional stress, and unfair business practices, according to Robinhood’s S-1 filing Thursday.
Robinhood settled with the family and the suit was dismissed, according to the filing, for an undisclosed amount of money.
The Financial Industry Regulatory Authority (FINRA), a private Wall Street regulator, cited Kearns’ suicide in a statement Wednesday announcing a $70 million penalty on Robinhood.
“In determining the appropriate sanctions, FINRA considered the widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm,” FINRA said in the statement.
FINRA ordered Robinhood to pay $12.6 million in restitution to other customers who had seen mistaken account balances. Robinhood announced on its blog Wednesday that it was taking steps to improve its customer service.
“We have substantially expanded and enhanced our customer support resources and services, including services provided to options and margin customers,” the post read.
The company announced it had filed for its initial public offering Thursday.
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