Can You File a Wrongful Death Lawsuit Against a Negligent Stock Broker?
You may have read stories about the sudden rise in share prices of the video game retailer GameStop. According to a January 29 report from CNET, GameStop shares saw a 14,300 percent increase over the preceding few months, fueled largely by a popular stock trading app called Robinhood.
According to CNET, Robinhood is a “financial services company founded in 2013 for the purpose of democratizing the financial system.” The basic idea is that any individual can use the Robinhood app to buy and sell stocks without going through a traditional broker or paying commissions. Robinhood does not collect any fees from its users, instead selling the actual stock orders to other firms, who give Robinhood a rebate as compensation.
A common criticism of Robinhood, particularly in light of the recent GameStop surge, is that the company preys upon unsophisticated amateur investors by “gamifying” the process of buying and selling stocks. And according to one recent lawsuit filed in California, Robinhood’s tactics allegedly led to the tragic death of a customer.
Parents Accuse Online Stock App of Causing Son’s Suicide
In personal injury law, we often handle “wrongful death” lawsuits. These are claims brought by the estate or family of a deceased individual against any party whose negligent acts caused that death. The most common type of wrongful death lawsuit involves something like a car accident. For instance, if a drunk driver crashes into another car and kills its occupants, the victims’ families can pursue a wrongful death claim against the drunk driver.
But a wrongful death lawsuit may be viable against any party who violated a “duty of care” towards a deceased individual. In the context of a car accident, the duty of care is owed by every driver to operate their vehicle in a reasonably safe manner. In other cases, the duty of care may be one imposed by a specific law or regulation.
In the Robinhood wrongful death lawsuit, the plaintiffs are the parents of a 20-year-old college student who died after committing suicide in June 2020. The victim used Robinhood to make a number of stock trades. According to the lawsuit, he believed his trades had led him to incur a negative balance of $730,000. This turned out to be a mistake, but the lawsuit said the victim committed suicide before hearing back from Robinhood.
So what exactly is the “duty of care” here? The lawsuit alleges that as a professional broker-dealer, Robinhood owed a duty of care to its customers to follow certain federal regulations. This duty of care was heightened given that many of its customers, like the victim, were young and “not fully developed” mentally. By preying upon these vulnerable individuals with a video game-like interface for trading stocks, Robinhood effectively engaged in reckless business practices that led to the victim’s suicide.
Will a judge or jury ultimately accept this argument? That remains to be seen. But cases like this nevertheless illustrate the broad scope of a wrongful death lawsuit. If you have lost a loved one due to someone else’s negligent or reckless conduct and would like to learn more about your legal options from a qualified wrongful death lawyer, contact Leifer & Ramirez today to schedule a free consultation.