Parents of Robinhood trader who died by suicide set to sue for wrongful death
cbsnews.com
cbsnews.com
However, I was able to glean the following TL;DR: Robinhood emailed this customer claiming that he owed them $170k. *This email was a lie.* It was a false statement of fact, made by the massively more knowledgeable party. Moreover, when the customer reached out to try to understand why Robinhood had made this claim, which to his knowledge could not have been true, they failed to respond in a reasonable manner, instead pulling a Google customer-support-wise. Foreseeably and unfortunately, the customer concluded that he had made an error and committed suicide.
For another instance of very similar facts, see Porter Feller's suicide in 2018.
These are complex financial products, and he should have known how they worked before playing with them.
> Later that night, at 3:26 a.m., the company sent an automated email demanding Alex take "immediate action," requesting a payment of more than $170,000 in just a few days.
They did not say, "one leg of your trade is now $170k in the red". After all, apparently that leg was $700k in the red. No, according to the article (which may be misleading, but I'm just trying to tl;dr it not run an independent investigation), Robinhood claimed that the customer needed to send them $170k immediately with unspecified consequences for failing to do so. If the debt could in fact be covered by other positions in the account (which is what the article says the customer's lawyers say), then Robinhood's claim is a lie. The customer did not need to transfer $170k into the account, there were other actions he could take.
You say he should have known that he had other avenues. Indeed, I acknowledge that explicitly in my original comment when I point out that the customer knew that what Robinhood had told him could not be true. But because of the knowledge imbalance he apparently came to doubt his own knowledge and believe the lie. That is why such a lie is particularly heinous, just as on the other case I mentioned.
If you don't want it to work that way, you have a simple solution, dont use margin to trade complex financial products.
Look, i get where you're coming from, but the fact is that these are complex financial products that most people shouldn't use.
They are risky, and have non-obvious mechanisms inherent to them that make them dangerous, thats why he had to take a test before being allowed to trade them.
This was a depressed man who was trading in highly leveraged products and got spooked when he tripped over one of many stumbling blocks, and immediately killed himself over it.
Its a sad story, but there was no negligence here, and nobody to blame but himself.
If the government were to impose such restrictions on something like voting, they would rightfully be slammed as intending to restrict and discourage voting, so how can one argue in good faith that the same restrictions imposed on something else encourage that something else?
If RH believes someone owes them money they should do what anyone else has to do - notify them via invoice or bill or whatever. If they were so concerned that the money they lied about was going to disappear they could have simply frozen this guys account.
Again, massive financial loss has a well established causal relationship to rapid suicide. You can’t simply steal this amount of money and then claim that this was not a foreseeable outcome.
He sold a put, and that put was exercised. He didn't have the cash to pay for it, so he was margin called and his portfolio was liquidated accordingly. Until the liquidation happened, he still owed the cash.
This is the way these products are supposed to work.
These are complex products that arent for everyone, thats why you have to take a test and swear you're aware of the risks involved.
He took the test and passed, he also executed the strategy correctly.
The problem is not robinhood here. Its not even the money.
The problem is the parents are looking for someone to blame because of something that hurt them.
That isn't a lie, it is quite literally what a margin call is.
This is the kind of huh? argument that makes ambulance chasing so lucrative in the wild and woolly American legal system. No retail, mass-market company could have forestalled that Darwin Award, but RH has to figure it's a very real if improbable cost of going after bottom feeders (kids and poor people).
During the GME saga people didn't understand they were also on loaned money for the time being sell or buy takes 2 days to clear.