Robinhood sued by family of stock trader who killed himself(theguardian.com)
theguardian.com
Robinhood sued by family of stock trader who killed himself
https://www.theguardian.com/us-news/2021/feb/09/robinhood-sued-by-family-of-stock-trader-who-killed-himself
65 comments
The hard part about this case will be that both sides have a decent arguement.
The way Robinhood displays this info is no different than most other brokers. I work at a fund and spent alotof time "smoothing" out our pnl to take care of issues like this where one side of a option basket gets exercised and the other side hasn't yet.
By that regard Robinhood is in good standing as they follow the industry practice.
The otherside of the coin is that option trading, especially for retail, often requires
1) the person requesting the ability to trade options explicitly.
2) a phone call that screens the user for a basic understanding.
3) the user has enough money in their account to be able to exercise any options that they buy, ie you buy 1 Call contract for Tesla that gives you the right to buy 100 shares at the strike, do you have enough money in your account to buy 100 shares of tesla? If not then you can't buy
4) don't allow users to sell options unless they have a large capital margin in their account, and often don't allow them to write contracts at all.
And robinhood has to have phone support for issues like this. This may be the thing that sinks them. Sometimes when dealing with money and contracts with time limits you need to talk to someone immediately on the phone. Robinhood is at fault here.
this poor adult chose suicide, a permanent solution to a temporary problem. if he had just waited a few days or talked to his parents.
The way Robinhood displays this info is no different than most other brokers. I work at a fund and spent alotof time "smoothing" out our pnl to take care of issues like this where one side of a option basket gets exercised and the other side hasn't yet.
By that regard Robinhood is in good standing as they follow the industry practice.
The otherside of the coin is that option trading, especially for retail, often requires
1) the person requesting the ability to trade options explicitly.
2) a phone call that screens the user for a basic understanding.
3) the user has enough money in their account to be able to exercise any options that they buy, ie you buy 1 Call contract for Tesla that gives you the right to buy 100 shares at the strike, do you have enough money in your account to buy 100 shares of tesla? If not then you can't buy
4) don't allow users to sell options unless they have a large capital margin in their account, and often don't allow them to write contracts at all.
And robinhood has to have phone support for issues like this. This may be the thing that sinks them. Sometimes when dealing with money and contracts with time limits you need to talk to someone immediately on the phone. Robinhood is at fault here.
this poor adult chose suicide, a permanent solution to a temporary problem. if he had just waited a few days or talked to his parents.
The article has less information than some others. Here's a bit that's probably a key to the family's lawsuit:
https://www.cbsnews.com/news/alex-kearns-robinhood-trader-su...
>Later that night, at 3:26 a.m., the company sent an automated email demanding Alex take "immediate action," requesting a payment of more than $170,000 in just a few days.
Alex was then unable to contact customer support via phone and email. The day after his suicide, he was sent this email:
>"Great news!" The email read, "We're reaching out to confirm that you've met your margin call and we've lifted your trade restrictions. If you have any questions about your margin call, please feel free to reach out. We're happy to help!"
https://www.cbsnews.com/news/alex-kearns-robinhood-trader-su...
>Later that night, at 3:26 a.m., the company sent an automated email demanding Alex take "immediate action," requesting a payment of more than $170,000 in just a few days.
Alex was then unable to contact customer support via phone and email. The day after his suicide, he was sent this email:
>"Great news!" The email read, "We're reaching out to confirm that you've met your margin call and we've lifted your trade restrictions. If you have any questions about your margin call, please feel free to reach out. We're happy to help!"
> Alex was then unable to contact customer support via phone and email
From what I read, he reached out to support (late at night) and they responded the next day (letting him know all was well?). Admittedly, this is after he killed himself, but it does seem to be a perfectly reasonable response time. It doesn't sound like they're in the wrong in that regard.
From what I read, he reached out to support (late at night) and they responded the next day (letting him know all was well?). Admittedly, this is after he killed himself, but it does seem to be a perfectly reasonable response time. It doesn't sound like they're in the wrong in that regard.
That's a pretty typical email to get from a broker. If you want to hold on to the stock that's been put into your account for some reason, you have to pay for it. Otherwise they'll settle things up for you.
> 3) the user has enough money in their account to be able to exercise any options that they buy, ie you buy 1 Call contract for Tesla that gives you the right to buy 100 shares at the strike, do you have enough money in your account to buy 100 shares of tesla? If not then you can't buy
I don't quite understand this one. first of all, if I buy a call I don't have to exercise it. if I don't have enough cash to exercise it, can't I just sell the contract itself for roughly the same gain? if so, why should there be a capital requirement to buy one?
I don't quite understand this one. first of all, if I buy a call I don't have to exercise it. if I don't have enough cash to exercise it, can't I just sell the contract itself for roughly the same gain? if so, why should there be a capital requirement to buy one?
> if I buy a call I don't have to exercise it
I'm assuming the loss was on options he wrote, not bought. Options buyers have a choice. Options writers don't.
There was an offsetting option or long or short position. But the options he wrote were exercised before those hedges settled. Robinhood's UI correctly showed the P&L at that time (though it could have gone further). The user didn't understand it. Robinhood then incorrectly sent a demand letter for $170,000 and didn't provide any means by which the user could contact them.
(Disclaimer: I am not a lawyer and none of this is even legal analysis let alone advice.)
I'm assuming the loss was on options he wrote, not bought. Options buyers have a choice. Options writers don't.
There was an offsetting option or long or short position. But the options he wrote were exercised before those hedges settled. Robinhood's UI correctly showed the P&L at that time (though it could have gone further). The user didn't understand it. Robinhood then incorrectly sent a demand letter for $170,000 and didn't provide any means by which the user could contact them.
(Disclaimer: I am not a lawyer and none of this is even legal analysis let alone advice.)
I assume proof of "good faith."
If you have no skin in the game, and can buy literally infinite numbers of options, with no intention to execute, that breaks a lot of things (not least, because of how you force counterparties to behave).
Afaik, abusing this is a big part of the Reddit pump-and-dump train playbook.
If you have no skin in the game, and can buy literally infinite numbers of options, with no intention to execute, that breaks a lot of things (not least, because of how you force counterparties to behave).
Afaik, abusing this is a big part of the Reddit pump-and-dump train playbook.
No, you can't.
You pay a premium for the option. One of the massive benefits of trading options is being able to leverage your money.
If you can't afford to buy 100 shares, you can buy an option for 100 shares for much cheaper, with the intention to flip the option later to either a bagholder or someone who wants to exercise it.
This method isn't even exclusive to retail traders.
You pay a premium for the option. One of the massive benefits of trading options is being able to leverage your money.
If you can't afford to buy 100 shares, you can buy an option for 100 shares for much cheaper, with the intention to flip the option later to either a bagholder or someone who wants to exercise it.
This method isn't even exclusive to retail traders.
you do have skin in the game though. you have to actually pay the premium for all those options. if you have no intention to exercise them (or at least sell the contracts before they expire), you are just throwing your own money away. if the premium is priced appropriately, this shouldn't be a problem for the counterparty. if not, it's kinda their own fault. am I missing something?
I think what you're missing is that you understand how options work. A 20 year old futzing around with Robinhood on his phone probably doesn't.
Robinhood removes the friction associated with getting authorized for things like options trading. It's like taking a 16 year old to the craps table at a casino. IMO, it's irresponsible, both as a service provider and a stakeholder in the broader market to make that type of activity available to people with no money.
Robinhood removes the friction associated with getting authorized for things like options trading. It's like taking a 16 year old to the craps table at a casino. IMO, it's irresponsible, both as a service provider and a stakeholder in the broader market to make that type of activity available to people with no money.
mainly I'm curious why chollida1 specifically thinks there ought to be a capital requirement to buy a call. I can see why you might not want to let a 20yo buy calls on margin (or anything on margin for that matter), but that wasn't specified in the original post. chollida1 seems to be a lot more experienced than me, so perhaps there is something to learn here.
in the unfortunate case of this guy who took his life, robinhood apparently gave him access to a large amount of margin and the ability to write options. that seems crazy to me. I doubt schwab would let me do that, and I've been trading with them for years.
in the unfortunate case of this guy who took his life, robinhood apparently gave him access to a large amount of margin and the ability to write options. that seems crazy to me. I doubt schwab would let me do that, and I've been trading with them for years.
Well the biggest reason alot of retail focused brokers dont' let you buy things yhou don't have the money to buy is what happens if you hold to expiry?
If its out of the money no big deal, you lose your money, what happens if its in the money?
Do they force you to exercise? If so then you owe them money that isn't in your account
Do they sell it for you? If so at what time? what if there is no offsetting bid for your option? What if they sell it and you had planned on exercising?
This just opens the brokerage up to all sorts of law suits eeven if their terms of service clearly aly out what they'll do.
There just is not always a cut and dry best option for what to do with options before they expire.
What happens if they sell an ITM option but it expires out of the money?
Forcing the user to have money to exercise their options makes it clear and easy, no guessing on when to sell the option, no worrying there wont' be a market for the option, etc.
If its out of the money no big deal, you lose your money, what happens if its in the money?
Do they force you to exercise? If so then you owe them money that isn't in your account
Do they sell it for you? If so at what time? what if there is no offsetting bid for your option? What if they sell it and you had planned on exercising?
This just opens the brokerage up to all sorts of law suits eeven if their terms of service clearly aly out what they'll do.
There just is not always a cut and dry best option for what to do with options before they expire.
What happens if they sell an ITM option but it expires out of the money?
Forcing the user to have money to exercise their options makes it clear and easy, no guessing on when to sell the option, no worrying there wont' be a market for the option, etc.
as long as they don't let my ITM option expire without doing anything, I don't think I would complain. but I see why a retail broker might not want to open this can of worms now. thanks for the breakdown.
Disagree on 3. There is no obligation to buy. Agree on 4 that options you sell need to be covered.
On number 4, I believe most brokers don’t allow you to trade options right away, you have to ask for permission before your account is approved for covered options trading (writing/selling options for stock you own, blocks of 100 shares for each option contract). To write options for stock you don’t own (this called naked), you have to ask for another approval. Usually both approvals require some online screening.
Well, not sure about industry practice, my knowledge is limited, but when I opened my trading account I was presented with some questions to assess my understanding.
For different products I get-together different questions if I want to enable them. This is with degiro.
For different products I get-together different questions if I want to enable them. This is with degiro.
I recently went through all of these tests and they're extremely trivial. I got through them with barely any knowledge about the topic. Even though I can now do options trading, I'm not going to touch it or anything like it until I've put in far more independent research, if at all.
Buying options really isn't a problem. Your losses are capped at your premium if the options expire worthless.
Selling options is where it gets _very_ dicey afaik. It seems like the person in question was selling covered options which is the safer way afaik.
But yeah, you shouldn't be super scared of buying options. Selling options, in my opinion, requires more understanding.
Selling options is where it gets _very_ dicey afaik. It seems like the person in question was selling covered options which is the safer way afaik.
But yeah, you shouldn't be super scared of buying options. Selling options, in my opinion, requires more understanding.
That I can recommend. It is extremely easy to loose money with it and end up with _nothing_.
Especially the heavily leverage products can go from +100% to -100% in hours. And then your money is just gone. And you have nothing.
Especially the heavily leverage products can go from +100% to -100% in hours. And then your money is just gone. And you have nothing.
> this poor adult chose suicide... if he had just waited a few days or talked to his parents.
Independent dependent?
Independent dependent?
For those who didn't read the article:
> The family of a 20-year-old stock trader who killed himself have sued the broker Robinhood for his death, citing its “misleading communications” that caused their son to panic over what he wrongly believed were huge market losses.
> Robinhood notified Alex Kearns in June of what he thought was a $730,000 loss on a trade, and when he was unable to communicate with anyone at the company, the college student was thrown into a highly distressed mental state, the lawsuit stated.
> As a result, fearing his family would have to repay the huge loss, he killed himself, according to the lawsuit, filed in California state court.
The lawsuit isn't about Robinhood encouraging gambling but rather about the UI/UX being catastrophically misleading.
> The family of a 20-year-old stock trader who killed himself have sued the broker Robinhood for his death, citing its “misleading communications” that caused their son to panic over what he wrongly believed were huge market losses.
> Robinhood notified Alex Kearns in June of what he thought was a $730,000 loss on a trade, and when he was unable to communicate with anyone at the company, the college student was thrown into a highly distressed mental state, the lawsuit stated.
> As a result, fearing his family would have to repay the huge loss, he killed himself, according to the lawsuit, filed in California state court.
The lawsuit isn't about Robinhood encouraging gambling but rather about the UI/UX being catastrophically misleading.
>The lawsuit isn't about Robinhood encouraging gambling but rather about the UI/UX being catastrophically misleading.
The Guardian article cited misses some key details that are contained here: https://www.cbsnews.com/news/alex-kearns-robinhood-trader-su...
>Later that night, at 3:26 a.m., the company sent an automated email demanding Alex take "immediate action," requesting a payment of more than $170,000 in just a few days.
He was then unable to actually get through to customer service due to lack of a phone number and no immediate reply via email.
The day after the suicide, this email was sent to him: >"Great news!" The email read, "We're reaching out to confirm that you've met your margin call and we've lifted your trade restrictions. If you have any questions about your margin call, please feel free to reach out. We're happy to help!"
The Guardian article cited misses some key details that are contained here: https://www.cbsnews.com/news/alex-kearns-robinhood-trader-su...
>Later that night, at 3:26 a.m., the company sent an automated email demanding Alex take "immediate action," requesting a payment of more than $170,000 in just a few days.
He was then unable to actually get through to customer service due to lack of a phone number and no immediate reply via email.
The day after the suicide, this email was sent to him: >"Great news!" The email read, "We're reaching out to confirm that you've met your margin call and we've lifted your trade restrictions. If you have any questions about your margin call, please feel free to reach out. We're happy to help!"
Algorithms are such callous bastards.
I know this might come across as cold, but I don't like the idea of Robinhood being liable for their users' misfortune. The new set of direct brokerage platforms allow people like me to manage their account directly, while my father and his father before him had to rely on someone from the bank. It effectively democratized portfolio management and I see it as a net positive for most people.
Maybe there could be a bit of a higher bar of entry with a basic 10 questions forms to ensure that investors know the terminology. Akin to how you need to fill a questionnaire to determine your investor profile when investing through a mutual fund.
Maybe there could be a bit of a higher bar of entry with a basic 10 questions forms to ensure that investors know the terminology. Akin to how you need to fill a questionnaire to determine your investor profile when investing through a mutual fund.
I don’t believe being “liable for users’ misfortune” is the issue here. While Robinhood showed the user being down hundreds of thousands of dollars, this was actually a UI issue and the user actually had a profit.
The dispute as I understand it was he did not “actually” (literally speaking) have a profit because the clearing and settlement hadn’t finished.
A lot of the anger with Robinhood comes down to the mistaken belief by many people that money moves instantly, trades happen instantly.
Robinhood UI is struggling to convey actual current value vs accrued unsettled value vs unrealized value.
These are non-trivial concepts. The time component of money confuses a lot of situations. Eg Most people treat retainers as revenue before it is earned; even SaaS companies treat MRR as earned before the time period elapsed and service is rendered. However this isn’t strictly correct or legal.
A lot of the anger with Robinhood comes down to the mistaken belief by many people that money moves instantly, trades happen instantly.
Robinhood UI is struggling to convey actual current value vs accrued unsettled value vs unrealized value.
These are non-trivial concepts. The time component of money confuses a lot of situations. Eg Most people treat retainers as revenue before it is earned; even SaaS companies treat MRR as earned before the time period elapsed and service is rendered. However this isn’t strictly correct or legal.
I thought the issue was he thought he had a $700K loss, tried to contact Robinhood customer service for clarification because he didn't think he should have a loss, Rh gave him a boilerplate automated message, and he killed himself before getting a clarification from Rh.
With a lot of these new Web services like Rh, GoPuff, Yelp, etc. it can be hard to get a hold of a real person in a timely manner.
With a lot of these new Web services like Rh, GoPuff, Yelp, etc. it can be hard to get a hold of a real person in a timely manner.
https://www.cbsnews.com/news/alex-kearns-robinhood-trader-su...
The article in the top post is missing details. Robinhood actually demanded $170k from him to settle his account. It wasn't a UI issue.
The article in the top post is missing details. Robinhood actually demanded $170k from him to settle his account. It wasn't a UI issue.
From that article, "the company sent an automated email demanding Alex take "immediate action," requesting a payment of more than $170,000 in just a few days..."
It definitely was a UI issue.
Email is part of UI / UX. Either they were programmed loosely or the email was poorly worded.
Email is part of UI / UX. Either they were programmed loosely or the email was poorly worded.
Email is indeed UI. Whether or not to send that email is business logic, and therefore not UI. Something on the backend though that this guy owed that much money, and thus the email was sent out. UI doesn't happen in a vacuum.
I hate to sound calloused here, but maybe if you don't understand transaction settlement time, don't trade that volume of options?
Robinhood has similar moral liability of a payday lender: it's not wholly their fault if people choose to make bad choices for themselves, but they are partially responsible for enabling them and/or obsfuscating terms.
But in this instance, we're talking about pretty standard industry processes and practices.
If you hand someone a gun with the expectation they know how to use it, and the first thing they do is blow their brains out... not sure how that's on you?
Robinhood has similar moral liability of a payday lender: it's not wholly their fault if people choose to make bad choices for themselves, but they are partially responsible for enabling them and/or obsfuscating terms.
But in this instance, we're talking about pretty standard industry processes and practices.
If you hand someone a gun with the expectation they know how to use it, and the first thing they do is blow their brains out... not sure how that's on you?
Robinhood is specifically targeting young, inexperienced investors as their market. Not having enough information as to how options work, not having an actual line to get support, sending out a flaming email demanding $170,000 erroneously... So many places where this could have been avoided, and should be expected considering the targeted clientele. They had this coming
It's not standard for a broker to not have live customer service. When/after I make a trade I can call Fidelity and talk to somebody. This kid tried to contact customer support and got an automated message. Try calling Uber or GoPuff customer support when your delivery doesn't come.
"Issue" sounds like a bug though. It was an accurate number, the user just didn't understand the context of it. The question is whether it was illegal to get the user into that position without them understanding what they were doing.
> Monday’s lawsuit said Robinhood had an obligation to know its customers and ensure its trading strategies were appropriate, but instead the broker preyed on inexperienced investors.
Does robinhood actually have this obligation? Not knowing anything, I would assume they don't actually have to do this. Appropriate is subjective and nonsensical imo. Did the guy do something inappropriate? On one hand I think no, it wasn't especially crazy as a financial move. On the other hand, should a 20 year old who doesn't know anything be able to get involved in 100k margins? Idk. I do think robinhood preys on inexperienced investors. I'm interested to see how it can be argued as illegal.
> Monday’s lawsuit said Robinhood had an obligation to know its customers and ensure its trading strategies were appropriate, but instead the broker preyed on inexperienced investors.
Does robinhood actually have this obligation? Not knowing anything, I would assume they don't actually have to do this. Appropriate is subjective and nonsensical imo. Did the guy do something inappropriate? On one hand I think no, it wasn't especially crazy as a financial move. On the other hand, should a 20 year old who doesn't know anything be able to get involved in 100k margins? Idk. I do think robinhood preys on inexperienced investors. I'm interested to see how it can be argued as illegal.
This is an area where the law needs to catch up.
Current law limits what many people can do in terms of the stock market specifically to protect unsavvy investors. What Robinhood is doing is no different than a 3rd party acting as a go between the stock market and an unsavvy investor but telling the unsavvy investor they went 700k+ in the hole.
The internet is slowly moving away from being the wild west, and things like this is a part of it.
Current law limits what many people can do in terms of the stock market specifically to protect unsavvy investors. What Robinhood is doing is no different than a 3rd party acting as a go between the stock market and an unsavvy investor but telling the unsavvy investor they went 700k+ in the hole.
The internet is slowly moving away from being the wild west, and things like this is a part of it.
I feel that the current law would have worked just fine if it was enforced properly - current law (at least in EU where I live - as far as I understand, SEC guidelines in USA are similar, but I may be mistaken) expects that unsavvy investors should be prohibited to make such trades, partly because we know well from historical experience that often it leads to sad consequences such as this case.
As the circumstances show, this young man did not have a proper understanding of what his trades (including the not-yet-settled part) meant and what the actual financial consequences and risks were at that point of time when he (mistakenly) felt that they are horrific enough to take his life. Robinhood should have tested for that capability and, given the absence of it, ensured that he can not trade options on their platform and be limited to simpler, more understandable investment products. If they intentionally make this verification superficial so that they can get more unsophisticated investors trading tricky products on their platform, that is praying on investors and should be prohibited.
As the circumstances show, this young man did not have a proper understanding of what his trades (including the not-yet-settled part) meant and what the actual financial consequences and risks were at that point of time when he (mistakenly) felt that they are horrific enough to take his life. Robinhood should have tested for that capability and, given the absence of it, ensured that he can not trade options on their platform and be limited to simpler, more understandable investment products. If they intentionally make this verification superficial so that they can get more unsophisticated investors trading tricky products on their platform, that is praying on investors and should be prohibited.
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Robinhood isn't liable for this, as long as they abide(d) by SEC or European laws.
Re: your second paragraph, consumers / retail traders in Europe have to prove basic understanding of the stock market and the risks involved before they are allowed to trade stock (MIFID II [1]).
I've been involved in building a stock trading platform for a bank, both before this was a thing and while it was being implemented. I'm a customer there nowadays, and with my knowledge level I'm not allowed to trade in stock options. Probably for the best. I'm doing well enough with a low risk index tracker on the one hand, and 'play money' on the other that I can risk losing.
[1] https://en.wikipedia.org/wiki/Directive_2014/65/EU
Re: your second paragraph, consumers / retail traders in Europe have to prove basic understanding of the stock market and the risks involved before they are allowed to trade stock (MIFID II [1]).
I've been involved in building a stock trading platform for a bank, both before this was a thing and while it was being implemented. I'm a customer there nowadays, and with my knowledge level I'm not allowed to trade in stock options. Probably for the best. I'm doing well enough with a low risk index tracker on the one hand, and 'play money' on the other that I can risk losing.
[1] https://en.wikipedia.org/wiki/Directive_2014/65/EU
Their systems set him an email demanding an immediate $170,000 payment. He couldn't find any actual person to talk to. Then he killed himself. The next day, their systems emailed him saying everything is fine.
Incredible.
Incredible.
I strongly agree - a lot of the "protections" have become a privilege for the rich and educated, and I say that as someone who doesn't eat organic locally-sourced Kale, drink lattes, read Marx at a hipster coffee shop, etc.
For example - brokerages keep you from trading on margin unless you have x money and y experience trading on margin and/or options.
You CANNOT invest into SpaceX (not pioneering SpaceX here, just an example) unless you are an accredited investor, that is, if you aren't RICH. Google does though.
These are serious disadvantages.
The real question is whether you want to be babied and coddled by people in power.
Edit: Deleted "controversial" topic sentence.
For example - brokerages keep you from trading on margin unless you have x money and y experience trading on margin and/or options.
You CANNOT invest into SpaceX (not pioneering SpaceX here, just an example) unless you are an accredited investor, that is, if you aren't RICH. Google does though.
These are serious disadvantages.
The real question is whether you want to be babied and coddled by people in power.
Edit: Deleted "controversial" topic sentence.
I don't think this is any way similar to gun legislation. If you lose a bunch of money investing in a scam startup, you might lose your money and be sad. If you buy a gun, you can use that to kill me and my family.
Believing that the government should restrict access to guns has nothing to do with being "babied and coddled by people in power" and everything to do with not wanting to be shot by someone else.
Believing that the government should restrict access to guns has nothing to do with being "babied and coddled by people in power" and everything to do with not wanting to be shot by someone else.
yes, let's not argue one controversial topic by introducing another. we all know HN has a deep disagreement over gun regulations.
I do feel that a lot of the restrictions on amateur trader have the effect of barring "normal" people from making some of the best investments. I ought to be allowed to fail like the best of them. the catch here is that I don't bear all the risk if I fail. if I lose everything on a stupid trade, I am entitled to lean on my fellow taxpayers for support. some balance needs to be struck between allowing me to fail and requiring other people to pick me back up if I do.
I do feel that a lot of the restrictions on amateur trader have the effect of barring "normal" people from making some of the best investments. I ought to be allowed to fail like the best of them. the catch here is that I don't bear all the risk if I fail. if I lose everything on a stupid trade, I am entitled to lean on my fellow taxpayers for support. some balance needs to be struck between allowing me to fail and requiring other people to pick me back up if I do.
> If you lose a bunch of money investing in a scam startup, you might lose your money and be sad. If you buy a gun, you can use that to kill me and my family.
The negative externalies of investment losses are costs to the public safety net, political distraction and the risk of a public bail out if the losses hit critical voting blocks.
The negative externalies of investment losses are costs to the public safety net, political distraction and the risk of a public bail out if the losses hit critical voting blocks.
Came here to say this. I have no idea how an insane person with a gun is equivalent to voluntarily trading. Should I accept that gun-toting idiots are an inherent risk in my life, even if I never purchase a gun?
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It's for your own protection. With the recent meme stocks (and crypto), thousands of people have barreled headfirst into stock trading, thinking they'll get rich. Thousands of people jumped onto the GME train and basically lost all their money, while the short sellers and hedge funds who actually control the market and sentiments thanks to the power of a fuckton of money laugh all the way to their mansions.
You cannot be trusted with margin / options if you haven't proven that you know the risks. If I were a broker, I wouldn't let you trade if you wouldn't be able to cover a loss on options - I'm sure brokers have been defrauded before by people just disappearing or going bankrupt.
You can't play with millions if all you have to your name is a $600 stimulus check and a sock of rainy day money. That's irresponsible.
Stick to what you can afford and what you know about.
You cannot be trusted with margin / options if you haven't proven that you know the risks. If I were a broker, I wouldn't let you trade if you wouldn't be able to cover a loss on options - I'm sure brokers have been defrauded before by people just disappearing or going bankrupt.
You can't play with millions if all you have to your name is a $600 stimulus check and a sock of rainy day money. That's irresponsible.
Stick to what you can afford and what you know about.
"Stick to what you can afford and what you know about."
Nice powertrip. My turn.
I am a CFA w/ a Series 6/7/63 that has degree in Finance/Accounting/Stats and has written automated trading bots.
This was NOT enough experience for Fidelity to let me trade options (ironically, after I traded options for their clients working for them for 2 years in my youth), but my friend who listed no experience and a high net worth got margin and options trading enabled in his account.
There is a VERY fine line between "for your own protection" and "so that people who already have resources have more options."
Nice powertrip. My turn.
I am a CFA w/ a Series 6/7/63 that has degree in Finance/Accounting/Stats and has written automated trading bots.
This was NOT enough experience for Fidelity to let me trade options (ironically, after I traded options for their clients working for them for 2 years in my youth), but my friend who listed no experience and a high net worth got margin and options trading enabled in his account.
There is a VERY fine line between "for your own protection" and "so that people who already have resources have more options."
I'd be more sympathetic to those who basically want to allow small retail investors to invest in anything they want to if there was really this big class of investments returning outsized risk-adjusted returns that "the little guy" isn't allowed to invest in.
Yes, there are gambles that can give great returns if you're lucky. And may even make sense as part of a diversified portfolio. That's the idea with VC of course. Though VC returns aren't actually that great in general.
Yes, there are gambles that can give great returns if you're lucky. And may even make sense as part of a diversified portfolio. That's the idea with VC of course. Though VC returns aren't actually that great in general.
Well SEC should start by allowing small US investors to invest in much safer things like the UK's Royal Mail privatisation and more recently Hipgnosis https://www.hipgnosissongs.com/ flat out bans US investors.
People can absolutely rationally debate where the line should be drawn. (And my understanding is that the SEC has loosened some rules.)
Where I at least part ways is the people here who argue vehemently that there should be no line given that people can go to Vegas and gamble away their life savings. And, as I say, I don't actually think people are missing out on fantastic opportunities for unsophisticated small-time investors that they think they are.
Where I at least part ways is the people here who argue vehemently that there should be no line given that people can go to Vegas and gamble away their life savings. And, as I say, I don't actually think people are missing out on fantastic opportunities for unsophisticated small-time investors that they think they are.
The family is not likely to prevail, although they might bully a settlement out of Robinhood. You can sue people for any reason at all, including word salad 'reasons,' but it doesn't mean that the suit will survive a motion to dismiss.
A Reddit comment on this story made a good point. Every high school student should be given a basic understanding of how bankruptcy works. Most won't have to use it, but it would save a lot (including this young man), from making a bad decision during a highly stressful time, when it's hard to think straight.
Every high school student should be taught financial literacy period.
The reason people go into these cycles of debt fueled poverty is because people just don't understand anything until it's too late.
The reason people go into these cycles of debt fueled poverty is because people just don't understand anything until it's too late.
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Or it could make them less cautious about taking on large debt.
Some legal background: this is filed in California state court. I believe it's a wrongful death action. Usually, in California, suicide defeats a defendant's liability, as it is an unforeseeable, "superseding cause" that breaks the causal link between the defendant's conduct and the injury. Yet causation can be established if the plaintiff can prove that the defendant's conduct triggered an "uncontrollable impulse" to commit suicide. If the decedent was still able to control himself and realize the nature of the act, then liability is precluded.
> If the decedent was still able to control himself and realize the nature of the act, then liability is precluded.
How does one prove something like this in court?
How does one prove something like this in court?
Not legal advice, but it seems like it boils down to an insanity test where that insanity deprives the act of suicide of its voluntariness. The "irresistible impulse" test used to exist in California penal law, and is what got Lorena Bobbitt acquitted. To prove it in this context, it would certainly help to have testimony about a descent into insanity that was apparent to those around the decedent, or even some medical evidence, but the very short timespan here makes that evidentiary basis far more difficult. I do not know enough about the caselaw to say whether taking the time to write a suicide note like that tends to evidence voluntariness; anecdotally, it seems like a contemplative act that would show that the decedent understood what he was about to undertake. If you can grab a copy, Tate v. Canonica, 180 Cal. App. 2d 898 (1960) is a good overview of the law and an example of when there isn't enough evidence. Grant v. F.P. Lathrop Constr. Co. 81 Cal. App. 3d 790 (1978) is an example of when a suicide can be linked to the defendant's conduct (negligence).
My understanding is that the family could have chosen to file it in Illinois state court, but intentionally chose California state court instead.
A few years ago I experimented with a crypto trading bot. Got busy with other things, and pivoted to less-active strategies. Several months later I was in bed about to fall asleep when I received a tax document from Coinbase, and the first thing I saw was '$150k.' Being relatively new to finance / taxes, and having profited nowhere near that amount, I had a moment of absolute panic. I can still remember getting out of bed and turning on my lights walking to my computer. Of course once I did some research it was clear the number referenced was pertaining to throughput, not gains, but it definitely would have been nice to have some additional context provided in the message from Coinbase. I imagine there is a bit of hesitation on the brokerage side to move in the direction of 'interpreting,' or 'downplaying' some of these more regulatory aspects, but any additional education they could provide would be helpful. Can definitely see how something like this could inadvertently nudge someone already having a tough time over the edge.
Never let a tragedy go to waste.
https://news.ycombinator.com/item?id=26071982