Robinhood Vows to Make Changes in Response to Customer’s Suicide
June 24, 2020 by Alex Padalka
Zero-commission brokerage Robinhood says it will revamp how it handles options trading in light of the suicide of one of its customers involved in a complex trading strategy.
Alexander Kearns, 20, took his own life on June 12, apparently after seeing his account, which had around $16,000, showing a negative $730,000 cash balance, according to his suicide note. The temporary negative balance may have been due to his use of what’s known as a “bull put spread,” a trading strategy that involves selling put options at a higher strike price while at the same time buying puts at a lower strike prices but with the same expiration date. Kearns’ cousin-in-law Bill Brewster, a research analyst at Chicago-based Sullimar Capital Group, has said the apparent account balance error was “an interface issue.”