"Thought It Was an 800 Million Loss"... Family of 20-Year-Old US College Student Who Made 'Extreme Choice' Sues Robinhood

[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] It was recently revealed that a 20-year-old American college student who had just started investing in stocks made an extreme choice due to a misunderstanding of the scale of his losses. The bereaved family has filed a lawsuit against the popular stock trading app Robinhood for damages.

According to US economic broadcaster CNBC and others on the 8th (local time), the family of Alex Kouns (20), who took his own life last June, filed a lawsuit against Robinhood on that day.

Kouns, a student at the University of Nebraska?Lincoln, first opened a stock account using Robinhood in 2019 when he was a high school senior. Since last year, he began trading derivatives, specifically put options (the right to sell owned stocks at a specific time and price), through Robinhood.

On June 11 of last year, Kouns’s Robinhood app showed a cash balance in his stock account of '-$730,165 (approximately 815 million KRW)'. This number did not represent the amount of debt Kouns owed, but was a temporary loss recorded on the books due to timing differences occurring during derivative trading.

This loss could have been recovered if Kouns had exercised the put options, but unaware of this fact at the time, he mistakenly believed he had to repay a huge debt due to his investments. Greatly distressed, Kouns sent multiple emails to Robinhood’s customer center but only received automated replies. Failing to connect with a staff member, Kouns ultimately made an extreme choice the next day.

The bereaved family claimed, "Robinhood did not properly inform users about investment-related matters, operated only an automated response service, and lacked customer support, resulting in Kouns’s death, mental harm due to negligence, and damages that cannot be limited to unfair business practices."

Robinhood expressed condolences over Kouns’s death. They improved the options trading system, added detailed guidance, and announced in December last year that they would implement voice consultation services for some options traders. Robinhood has also previously been involved in an administrative lawsuit in Massachusetts, where it was accused of unethical behavior such as treating stocks like a game and encouraging inexperienced young customers to trade more, resulting in requests for fines and other penalties.

This content was produced with the assistance of AI translation services.