Company also faces class-action lawsuits over its decision last month to restrict trading in several highflying stocks
The family of a 20-year-old student who took his own life after believing he racked up big trading losses on Robinhood Markets Inc. filed a lawsuit against the company, saying its “reckless conduct directly and proximately caused the death of one of its victims.”
The father, mother and sister of Alex Kearns, a Robinhood user and an undergraduate at the University of Nebraska-Lincoln, said in a complaint filed in California state court on Monday that Robinhood contributed to his death through “misleading communications” about his investments and “virtually non-existent” customer service. They are seeking unspecified damages.
“We were devastated by Alex Kearns’ death,“ a Robinhood spokesman said in an email. ”We remain committed to making Robinhood a place to learn and invest responsibly."
Robinhood was one of the biggest beneficiaries of the boom in retail trading during pandemic lockdowns,which reached new heightslast month with the mania around GameStop Corp. and other stocks favored byReddit’s WallStreetBets forum. The company amassed about 20 million users by the end of last year, and executives have told investors that Robinhood is planning an initial public offering in the first half of 2021,The Wall Street Journal previously reported.
But amid Robinhood’s growth, the company at times failed to give priority to things like customer service, communications and risk management.