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Thu Jun 18, 2020, 06:32 PM

Young trader dies by suicide after thinking he racked up big losses on Robinhood

Hat tip, Newser, which is 100% clickbait.

FINANCE
Young trader dies by suicide after thinking he racked up big losses on Robinhood
PUBLISHED THU, JUN 18 202012:01 PM EDTUPDATED 2 HOURS AGO

Yasmin Khorram
@YASMINKHORRAM
Kate Rooney
@KR00NEY

KEY POINTS
• A 20-year-old trader who said he lost hundreds of thousands of dollars on the free trading app took his own life, according to his family.
• In a note, Alex Kearns blamed Robinhood for allowing him to take on the risk.
• But Alex may have misunderstood the Robinhood financial statement, according to a relative.
• The events underscore the risk that comes with complicated financial instruments like options trading.

On the small yellow sticky note that 20-year-old Alex Kearns left on his bedroom door was an ominous message saying to turn on the computer.

Daniel Kearns powered up his son’s laptop in their home in Naperville, Ilinois. Within seconds, a four-paragraph letter flashed on the screen. “If you’re reading this, then I am dead,” the note started.

It was less than 24 hours after Alex had checked his account at the wildly popular trading app, Robinhood. In his note, he said he thought he had quickly racked up a negative $730,165 cash balance. But Alex may have misunderstood the Robinhood financial statement, according to a relative.

“He thought he was exposed, he thought that ending his life would protect his family from the exposure,” Bill Brewster, a cousin by marriage and an analyst at Sullimar Capital, told CNBC in a phone interview. “He got on his bike and never came home.”

{snip}

If you or someone you know is in crisis, call the National Suicide Prevention Lifeline at 800-273-8255

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Reply Young trader dies by suicide after thinking he racked up big losses on Robinhood (Original post)
mahatmakanejeeves Jun 18 OP
progree Jun 18 #1

Response to mahatmakanejeeves (Original post)

Thu Jun 18, 2020, 11:21 PM

1. There's a screenshot of his account with the negative 730,000 cash and buying power

But negative buying power and negative cash are not the same as normal debt. The $730,000 amount could have been reflecting the other side of an options trade not settled yet and the value of stocks tied to those options.

A corresponding trade to cover a purchase is often not executed until the following trading day, which Robinhood tells its users via email and notifications. In that case, cash and buying power will come up as negative until the other side has not been processed. The temporary negative display is not a balance of debt and the overall portfolio value would reflect the value of the account.

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