By Joseph Gray
Robinhood, a widely popular stock trading app that is advertised to teens and adults, has come under fire. In the past year, two major events have transpired. Back in June, 20-year old Alexander Kearns was trading options on Robinhood. A student at the University of Nebraska, Kearns had picked up stocks and stock trading during the COVID-19 quarantine. Kearns awoke one day to find that the Robinhood app claimed he was $730,000 in debt.
Confused and broken, Kearn’s took his own life on June 12th, 2020. Kearns left a note reading, “How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?” It was quickly discovered that Kearns app had glitched and in fact, did not have that much leverage. Robinhood has since apologized and promised changes to the platform, yet come 2021, nothing has changed and no one has been held responsible for the death of Alexander E. Kearns.
Robinhood has been seen as a hero, helping the average person get into the complex business of Wall Street and stocks, but recent events are causing a flip of opinion. A group of people on the website Reddit decided to use Robinhood to invest in Gamestop stock (GME), which started off at $17.25. Over the course of 5 days, GME stock skyrocketed to be worth $483 a piece, making people millionaires overnight. Selling out quickly for a nice profit only inflated the market more, costing Wall Street millions. Angered by this ‘market manipulation’, Wall Street demanded that Robinhood do something about the issue, Robinhood would make a grave mistake in the eyes of the public. Limiting GME stock would be Robinhood’s response, not allowing purchase or sale, breaking many laws and gaining mass attention from the media after the controversial action. Things have calmed down since then, but Robinhood is still facing the media, the public, and 90 lawsuits for the limit of GME stock.
Since America was founded, there has been a strong focus on freedom in general, which included freedom of market. Jonah Lane, another youth who got into stocks because of quarantine, has been following the stories, and he knows the stock trade.
Lane expressed his own beliefs on the subject of GME stocks, “I believe that the manipulation of the GME stock went against what was envisioned for the economy. The economy is supposed to be free, save for some government regulation such as FDA. Sure, the Wall Street cliques were also manipulating the market and the group of people from reddit were just playing their game, and to a degree I think there was some justice in what they did; but it still goes against the vision of a (relatively) free market.”
He went on to say, “The death of Alexander Kearn was very unfortunate. I personally wouldn’t say that Robinhood should take sole responsibility for his death, as I think it’s likely that he had some underlying mental health issues. I haven’t checked a more recent update on his case, so I can’t say I’m an expert on what happened, but I think that’s a likely possibility. Of course, though, Robinhood deserves to be punished in some way. A financial platform needs to be working without problem at all times.”
He followed up his beliefs elaborating on his perceptions of the American economy on a whole. When it comes to the economy in general, the United States has more of a mixed economy. The Stock Market, however, is a free market. Anyone can get into the stock market as long as they have enough capital. The competition is very steep, though, and the people at top, such as the Wall Street investors tend to pull strings in order to make sure they stay at the top which often cuts into the capital of many investors and businessmen below them. Robinhood is not a hero, Robinhood is a business. They’re playing a part in Wall Street’s corruption because it’s economically the wiser thing, which is a sad thing to say.”
Robinhood, safeguard? Or Tyrants? Free or set? Do the pros outweigh the cons? That is for the people to decide. But it is no doubt that these actions will tarnish their reputation and credibility, it’s no doubt that they broke the law, but who knows whether they’ll see the consequences is unknown at this moment. The CEO of Robinhood has since broken their silence and apologized to Congress for halting trade of GME stock, but even so, the company is facing just about 90 lawsuits just for the halt of trade. The fate of Robinhood is in the hands of the court, will they come out clean, or go down in debt?