
20-Year-Old Robinhood Customer Dies by Suicide After a $730k Negative Balance - shawnMer
https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-year-old-robinhood-customer-commits-suicide-after-seeing-a-730000-negative-balance/#37e1b96f5928
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wmeredith
“In fact, a screenshot from Kearns’ mobile phone reveals that while his
account had a negative $730,165 cash balance displayed in red, it may not have
represented uncollateralized indebtedness at all, but rather his temporary
balance until the stocks underlying his assigned options actually settled into
his account.”

How the hell is this a thing? Who approved this UI?

~~~
Someone1234
It isn't a "UI" decision, that's an accurate reflection of the value of the
account at that point in time. How would you reflect a future date's strike
price without knowing what that could be? You cannot.

The problem isn't the "UI" the problem is that people are options trading who
have no business doing so. It is actually incredibly complicated, and some
gambits people are making even more so.

I've read up on options, but I don't do so because I know enough to know I'd
need to full time study it for up to a year and then dry-trade to test my
assumptions.

~~~
kls
It's not that hard of a market but it is a market with a higher risk tolerance
than the average investor should tolerate. Most people that trade in the
market know you are negative till the other trade settles. You are right it is
not a UI issue, the UI reflected the current state of his trades.

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magicalhippo
Here in Norway, had the loss actually been real, he could have declared
personal bankruptcy and moved on with his life. From what I can see the US has
something similar, though I'm not sure how effective it is?

Tragic event regardless, and a stark reminder to us programmers that we should
always keep in mind what exactly we're doing, what are we telling the users,
what are we letting the users do.

~~~
andreicek
Excuse my ignorance but how does personal bankruptcy work? Does this allow you
to accumulate debt and move along?

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magicalhippo
An overview of the process here in Norway can be found here[1]. Basically the
rights to all your possessions go to the trustee or court in charge of the
case, which will then try to liquidate assets and pay back the creditors.

However a big difference to a corporate bankruptcy is that if you're unable to
provide for yourself, you can apply to the trustee/court to get some money for
essentials from your previous assets. You can also claim that certain assets
are "essential", so you can keep them. This could be clothes, furniture etc.
You also get to keep tools, means of transportation etc that you require for
your work or similar. Your home is also protected to some degree.

Once the case is settled you pretty much continue your life. You can't start a
company for some time, but AFAIK nothing huge hanging over you.

[1]:
[https://www.konkursradet.no/?cat=304773](https://www.konkursradet.no/?cat=304773)

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rjkennedy98
Except for possibly commodities what is the purpose of these options. So far
as I can tell it’s just gambling. Guessing whether a stock price will be
slightly higher in a few weeks isn’t investing. These people aren’t doing due
diligence and reading through prospectuses and understanding the proper value
of the companies. They are just reading r/wallstreetbets and literally
gambling on popular stocks. How does this do anybody any good? It just
produces a few people who get massively lucky and a lot of people who lose
everything. Neither one deserves their outcome and we are all worse off for
it.

~~~
ericmay
Think about it like this:

Imagine you're the finance manager for an endowment of a university. You may
have a fiduciary duty to grow the endowment by x%/year or not really lose all
the money you have. Maybe if your endowment drops by 10% that means you can't
fund the physics research department.

Now, what can you do about it? You want to protect the investment, but you
can't predict the future. So instead you pay people for the option to buy
shares of stock at a certain price or sell shares at a certain price. You know
that if your investments drop some % it means you can't fund the physics
department, so you pay a small amount of money to insure that if something
crazy happens, like a pandemic, that you don't lose 10% or more of your
endowment.

I know that's not the best explanation, but hopefully you get the gist of it.
People who do options trading are trading with a leveraged exposure to the
price of a stock. They potentially can be left with $0 because the options
become worthless, so they're taking the risk of that happening with the hope
that the stock price moves in a certain direction, so that the people who need
to protect their money will pay them in order to protect against stock price
movements.

Hopefully someone else can chime in here too with something more concise.

W.R.T this scenario with Robinhood - this will sound callous but it's a non-
story. There's no HUGE problem that needs to be solved here besides Robinhood
(and other applications) being more strict about letting people trade options.
People take risks, they live life. Sometimes they make mistakes and commit
suicide. It's incredibly tragic, it really is, but millions of people trade
options and it is a functional aspect of capital markets.

~~~
kls
TLDR; they are investment insurance, and they serve a purpose but like every
market they attract speculators.

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battery423
Its really unfortunate that we have a mental model as default which makes
suicide the first choice.

Living should be better/easier then not living.

I do wanna make clear, that suicide well thought of and for a clear reason, is
still a valid thing and everyone of us should have control over their own
lifes.

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gowld
This seems to clearly be a case of a person who succumbed to pre-existing
mental health troubles, not someone driven to desperation by (the appearance
of) financial troubles.

That said, Robinhood is evil.

> shower of colorful confetti Robinhood routinely deploys after customers make
> trades.

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chirau
Why do you say Robinhood is evil? It's a platform. It does not make decisions
for you. Heck,it does not even give you recommendations. Even the greatest
tools in the wrong hands can lead to harm but can you blame the tool? You
don't blame the knife when you cut yourself.

~~~
aka1234
It intentionally gamifies financial transactions (see the OP's comment about
the colorful confetti that displays when user make trades). The app is
designed to provide a dopamine hit when making trades, the only purpose of
which is to compel the user to make additional trades.

Robinhood intentionally attempts to make financial transactions fun and
desirable to the user. This is to drive more trade volume on their platform.
The app is leveraging psychology to make users more active on the platform,
which may not necessarily be in the user's longterm financial interest. If
your financial app uses the same gamification tricks as a slot machine, that's
a problem.

This person was 20 years old -- their brain isn't even fully developed yet. No
responsible company would allow a 20-year-olds to dig themselves into a
$700,000+ hole. That's a lifetime of debt for all but the highest income
earners. Even banks, for all their issues, wouldn't allow that.

Yes, the person was legally an adult and make their own decisions. But no
responsible company would facilitate a chain of decisions that would lead to
$700,000 in debt. If only for self preservation, because the dead can't pay
off that debt to the company.

But hey, Robinhood is playing with fake VC money so whatever... right? What's
a couple of bodies when Robinhood is a disruptor and makes complex financial
transactions fuuuuuuuuuun. Party on!

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bradstewart
I've never used Robinhood--does it allow option trading by default?

I had to fill out all sorts of paperwork informing my brokerage that I was
aware of the risks, etc before ANY option trading was available. And they
still only provided a small margin line at first, with a note saying they
would increase it after I traded more options and they were sure I knew what I
was doing.

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thatguy0900
You basically just tick a checkbox when making an account, it has a few splash
screens of warning but that's it.

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detaro
dupe:
[https://news.ycombinator.com/item?id=23553794](https://news.ycombinator.com/item?id=23553794)
and others linked there

