A college student committed suicide after seeing his account on the Robinhood stock trading app showing a negative cash balance of $730,165.
Alexander E. Kearns, 20, died on Friday, June 12, after apparently hurling himself in his home town of Naperville, Illinois, in front of an oncoming freight train.
Shame, anger over 'debt'
Kearns, a student at the University of Nebraska, left a heartbreaking suicide note detailing his shame and anger at finding the negative balance, Forbes reported on Wednesday, June 17.
Part of which his cousin-in-law Bill Brewster published on his Twitter account. Kearns directs much of his
frustration over Robinhood in the note.
"How was a 20-year-old with no income able to get assigned almost a million dollars worth of leverage?" read the note. The letter signed off with the step, "F - k Robinood."
Kearns seems to have used what is known as a 'bull put spread' from his note, a technique that reduces the risk to an investor by buying and selling put options at different strike prices.
Kearns had been trading options, not stocks, as Forbes later reported. Hence, the negative $730,000 balance seems to be a temporary sum until the stocks tied to his account are settled.
Robinhood did not respond immediately to DailyMail.com's request for comment. However, a company spokesperson told Forbes they have reached out to share their condolences with the family.
"All of us at Robinhood are deeply saddened to hear this terrible news," it added. The firm, however, refused to disclose specifics of Kearns' trades, citing privacy concerns.
Suicide news comes amid a boom in trading by small investors hooked on free trading apps that led to an increase in demand for risky stocks, The New York Post reported.
According to his family, Kearns had only recently begun trading during the pandemic as an antidote to boredom. The college student 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. According to his relative, Kearns was a kid who was so conscious about savings when he was younger.
Brewster posted on Twitter the tragic details of Kearn's death, aiming to inform the public and urging Robinhood to update its code to prevent a potential tragedy.
Acknowledging his confusion in the suicide note, Kearns wrote the puts he bought and sold should have canceled out, too, since he also has "no clue" what he was doing in hindsight.
"Where the f-k was the SEC?? Where was FINRA?? This kid had no income and was granted a million $ in leverage!" tweeted @apollotradingsd.
Robinhood has exploded in popularity since its launch in 2013, drawing 13 million users with a median age of 31.
The commission-free app has pushed traditional brokerages like Charles Shwab and Merrill Lynch into offering free online trading to compete.
Robinhood and similar offers make it easy to engage in trading options and agreements to purchase or sell stock blocks at a certain price by a given date.