Alexander E. Kearns, 20, died on Friday after believing he was deeply in debt
A college student has committed suicide after seeing a negative cash balance of $730,165 in his account on the Robinhood stock trading app.
Alexander E. Kearns, 20, died on Friday after apparently hurling himself in front of an oncoming freight train in his home town of Naperville, Illinois.
Kearns, a University of Nebraska student who was home on break, left a heartbreaking suicide note, part of which was published online by his cousin-in-law Bill Brewster.
‘How was a 20 year old with no income able to get assigned almost a million dollar’s worth of leverage?’ the note reads. ‘A painful lesson. F**k Robinhood.’
Although the details of Kearns’ trades have not been made public, there is reason to believe that his negative account balance was merely a temporary glitch, and he was not in fact $730,000 in debt as he believed.
Kearns left this screenshot of his Robinhood account, showing a negative cash balance of $730,165.62. However, there is reason to believe this was a temporary glitch
This note, shared online by Kearns’ cousin, was found after the college student died
From his note, Kearns appears to have been using what’s known as a ‘bull put spread,’ a strategy that limits risk for a trader by both buying and selling put options at different strike prices.
It’s likely that the negative balance appeared in Kearns’ account only temporarily, as one half of the trade settled before the other did.
Robinhood did not immediately respond to a request for comment from DailyMail.com, but told Forbes: ‘All of us at Robinhood are deeply saddened to hear this terrible news and we reached out to share our condolences with the family over the weekend.’
The company declined to share details of Kearns’ trades, citing privacy concerns.
According to his family, Kearns had only recently started trading as an antidote to boredom during the pandemic, and 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. ‘I mean this is a kid that when he was younger was so conscious about savings.’
Brewster shared the painful details of Kearns’ death on Twitter, hoping to educate the public and push Robinhood to make changes to its interface to avoid future tragedy.
Kearns died at this railroad crossing in Naperville, Illinois after writing a suicide note
‘Tragically, I don’t even think he made that big of a mistake. This is an interface issue, they have slick interfaces. Confetti popping everywhere,’ Brewster told Forbes, referring to the shower of colorful confetti Robinhood displays when cash is deposited into an account.
‘They try to gamify trading and couch it as investment,’ he said.
Since launching in 2013, Robinhood has exploded in popularity, attracting 13 million users with a median age of 31.
The app, which is commission-free, has pushed traditional brokerages such as Charles Shwab and Merrill Lynch to offer free online trading in order to compete.
Robinhood and similar offerings make it easy to get involved in trading options, which are agreements to buy or sell blocks of stock at a certain price by a certain date.
Robinhood and similar offerings make it easy to get involved in trading options, which can be wildly lucrative but also can have higher risks
Options trading can be wildly lucrative, but it is also highly complex and comes with greater risk.
Unlike trading stock, in which it is impossible to lose more money than you initially invest, in certain situations options trading can expose the trader to losing a theoretically infinite amount of money.
‘The markets are bananas right now. It’s not the time for amateurs,’ warned Brewster, an analyst at Chicago-based Sullimar Capital Group, in a tweet.
‘Really really pay attention to position sizing. Stay away from exotic instruments like options and futures.’
Visitation for Kearns is scheduled for Friday at Beidelman-Kunsch Funeral Homes & Crematory in Naperville.
In lieu of flowers, his family requests that donations be made in his name to the American Foundation for Suicide Prevention.
If you or someone you know needs support, contact the National Suicide Prevention Lifeline at 1-800-273-8255.