Jay Clayton, chairman of the SEC, told lawmakers last month the incident was “just terrible.” Clayton said the agency is working with FINRA, the finance industry’s self-regulator, to improve disclosure requirements in this area. The Securities and Exchange Commission, which Underwood mentioned in the letter as a a regulator that should be urged to take action here, declined to comment. “This spotlights some real gaps in our systems and oversight,” she said.
Lawmakers are “exploring avenues to compel” regulators to increase oversight on Robinhood and similar platforms, Underwood said in an interview. The tragedy could prompt increased scrutiny from regulators. That customer service typically takes place via email. It’s real life.”Ī Robinhood spokesperson said the company has doubled the number of customer support agents it has and plans to add hundreds of registered financial services professionals by the end of the year. “Robinhood has designed a platform that feels very much like a video game…It’s not a game. “I see that as a recipe for disaster,” Underwood told CNN Business. Underwood accused Robinhood of incentivizing risky trading to new investors while providing limited customer support. The Kearns family believes Alexander was misled by the app’s interface suggesting he owed $730,000, when that was not really the case. Kearns, a college student with no income, was using Robinhood to trade complex options instruments.
The tragedy drew widespread attention to the potential risks of the free-trading boom ushered in by Robinhood, which caters to young, first-time investors. The company also announced plans at the time to make a $250,000 donation to the American Foundation for Suicide Prevention and urged people who are in crisis to reach out for help. “We are personally devastated by this tragedy,” Vlad Tenev and Baiju Bhatt, Robinhood’s co-CEOs, wrote in a blog post. Last month, Robinhood announced plans to improve its user interface in response to Kearns’s death. “We take our responsibility to our customers seriously and will work with the Representatives and Senators to address their questions and concerns,” a spokesperson said in a statement. In response to the letter, Robinhood said it would work with the lawmakers.
The letter was also signed by Illinois Senators Dick Durbin and Tammy Duckworth. Underwood, a Democrat who represents the Illinois district where Kearns’s parents live, wrote a letter to Robinhood that expressed “serious concerns” about a “lack of safeguards” at the $8.6 billion trading platform. Apparent suicide by 20-year-old Robinhood trader who saw a negative $730,000 balance prompts app to make changes
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