A suburban Naperville trader died by suicide last week after reportedly seeing he had a $730,000 negative balance on the popular trading app Robinhood. However, family members said he may have misinterpreted a financial statement.
Alex Kearns, a 20-year-old from Naperville, was studying business and had a growing interest in financial markets, family members stated. Kearns died 13 hours after he checked his account on Robinhood.
“He thought he was exposed, he thought that ending his life would protect his family from the exposure,” said Bill Brewster, a cousin by marriage and an analyst at Sullimar Capital. “He got on his bike and never came home.”
Brewster, who is now demanding answers from the company, said Kearns actually had $16,000 in his account.
"I'm out here to make sure that never happens again, because Alex deserves that," he said. "Because the only thing that’s worse than dying over nothing is having nothing change because of it."
The free-trading app he was using has become a popular entry point to the stock market for first-time investors. It has grown from 1 million users in 2016, to 10 million at the start of this year, with a loyal following on social media. On one Reddit forum, Wall Street Bets, traders often joke about major losses on Robinhood and post screenshots of their gains.
In a note Kearns left to his family, the 20-year-old accused Robinhood of allowing him to pile on too much risk. He claimed the puts he bought, and the shares sold “should have canceled out” but in hindsight, he said he had “no clue” what he was doing.
“How was a 20-year old with no income able to get assigned almost a million dollars worth of leverage?” the note reads. “There was no intention to be assigned this much and take this much risk, and I only thought that I was risking the money that I actually owed.”
Suicide is the result of multiple contributing factors and not the result of a single event. Still, the tragedy is a reminder of risks, and potential for big losses, that can come with complicated trading instruments such as options. Over the weekend, Brewster took to social media to find answers and in the process warned others about the pitfalls of day trading.
“This is investing, this isn’t a game. It’s people’s lives,” Brewster said.
If you received unexpected or troubling news, mental health experts say, it's especially important to take a step back and use your coping skills.
"You can do anything that can help distract your mind from those feelings," said Abby Koch, a licensed clinical social worker. "Unfortunately, some people just can’t think that quick, which is also why I say, just in general, we need to keep an eye on each other."
With the coronavirus pandemic, Koch said, it's especially important to be there for others.
"Many people have not had to face this type of pandemic and so they’re learning how to survive every day," she said.
In a statement, a spokesperson for Robinhood said they “are deeply saddened to hear this terrible news, and we reached out to share our condolences with the family.” The spokesperson confirmed that Kearns did have an account with the brokerage start-up but would not provide any additional details.
Meanwhile, the company said it's working on changes to its user interface.
"Alex was super-interested in tech," Brewster said. "If we can make tech a little bit better for society, it would be a little of an honor to him."