Trading app Robinhood has announced major changes to its service following a 20-year suicide on the platform that committed suicide. Alexander Kearns committed suicide after an options trade resulted in a negative balance of €730,000 in his trading account. Although the negative number refers to available purchasing power rather than debt, Kearns left a note that effectively blamed Robinhood for his death. "How could a 20 year old with no income get almost €1 million in leverage?" He asked for Kearns' message. Robinhood, which has around 13 million users worldwide, responded quickly to the tragedy, with founders Vlad Tenev and Baiju Bhatt saying they were "personally devastated" in a statement. The company also immediately pledged €250,000 to the American Foundation for Suicide Prevention.
Robinhood changes
The founders also promised more lasting changes to Robinhood, notably tweaking options trading, which carries extremely high and yet largely unlimited risk for novice traders using the platform. For starters, the app will make changes to the way users view their balance and purchasing power. By doing so, the company hopes to avoid future misrepresentations like the one that led to Kearns' death. The application will also focus on the execution and allocation of multi-leg option orders. Although no specific changes have been defined yet, Robinhood will likely change the way traders enter orders and receive information during early allocation. The company also said it would hire an options education specialist to add more educational content on options trading. Perhaps most importantly, Robinhood will tighten the eligibility conditions for traders to get trading account options. The platform may require additional trading experience or an educational program to ensure options traders fully understand the risks they are taking.