The family of a college student who killed himself after thinking he’d lost a fortune using Robinhood sued the free trading app Monday.
A message left behind by Alex Kearns asked how it was that a 20-year-old with no income could get access to nearly $1 million of financial leverage using Robinhood, according to the suit filed in Silicon Valley, where the app is based.
“Robinhood’s website entices young, inexperienced users,” the suit contends.
“By marketing its online trading platform like a video game, it implied that trading stock and options was a fun way to make money, perhaps even to get rich.”
The suit accuses Robinhood of causing the Illinois man’s death along with unfair business practices, and asks for unspecified damages.
In response to an AFP query, Robinhood said it was “devastated” by Kearns’ death last June and has since improved trading features along with guidance and education features for users.
“We remain committed to making Robinhood a place to learn and invest responsibly,” a spokesperson said.
Kearns was in his final year of high school when he opened a Robinhood account, according to the suit.
He used the app to start trading options in his freshman year of college, and a series of trades resulted in him finding his account was $730,000 in the red, the suit detailed.
“Tragically, Robinhood’s communications were completely misleading, because, in reality, Alex did not owe any money,” the lawsuit contended.
“He held options in his account that more than covered his obligation.”
The suit comes after traders who banded together over Reddit and other social media platforms in recent weeks used Robinhood to make massive share purchases of GameStop, AMC Entertainment and other struggling companies that wealthy investors had bet against.
The campaign, intended to make hedge funds and other large investors suffer, caused the share prices of these companies to soar, and caught the attention securities regulators.
An app popular among retail investors whose stated goal is to “democratize finance for all,” Robinhood at one point limited trades on the most volatile stocks, before reversing course the next day.
Wall Street stocks fell early Thursday, extending a pullback from the prior session on worries about economic weakness in the wake of the coronavirus.
About 15 minutes into trading, the Dow Jones Industrial Average was down 0.7 percent to 26,589.86.
The broad-based S&P 500 shed 0.6 percent to 3,216.90, while the tech-rich Nasdaq Composite Index shed 0.7 percent to 10,560.68.
US jobless claims last week rose slightly to 870,000 as the world’s biggest economy continues to face headwinds following the upheaval of the coronavirus pandemic.
Thursday’s early losses extended the downward trend from Wednesday when stocks retreated on disappointment at the lack of new fiscal stimulus in the United States and worries over the reinstatement of some coronavirus restrictions in parts of France and Britain.
On Wednesday, “there was a palpable sense of uncertainty about the economy, the election, China, the coronavirus and the behaviour of the mega-cap stocks,” said Briefing.com analyst Patrick O’Hare.
“The selling… will keep going this morning, as this market seems to be trading on the momentum factor than anything else, only this time the momentum is cutting to the downside.”
Apple on Thursday reported revenue slipped in the first three months of this year as revenue inched higher despite the pandemic’s hit.
Apple said it made a profit of $11.2 billion on sales of $58.3 billion in the quarter, compared to net income of $11.7 billion on revenue of $58 billion in the same period a year earlier.
“Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in services and a quarterly record for wearables,” chief executive Tim Cook said in an earnings release.
Apple shares were down nearly two percent in after-hours trades that followed release of the earnings figures.
Revenue from iPhones — the big earnings segment for Apple in recent years — dropped some seven percent from a year earlier to $29 billion in a period where smartphone sales have been sagging.
Stock markets slumped on Tuesday on geopolitical risks stretching from US tensions with Russia and Saudi Arabia to trade issues and Italy’s budget stand-off with the European Union.
European stocks picked up where Asia left off, with Frankfurt losing more than two percent in morning deals after Hong Kong closed down more than three percent.
The dollar was down versus the euro, yen, and pound.
Frankfurt was dragged down additionally by a near eight-percent plunge in the share price of chemicals and pharmaceuticals giant Bayer to 70.50 euros.
A San Francisco judge on Monday upheld a jury verdict that found Bayer-owned Monsanto liable for not warning a groundskeeper that its weed killer product Roundup might cause cancer.
Judge Suzanne Bolanos denied Monsanto’s request for a new trial but cut the $289 million damages award to $78 million to comply with the law regarding how punitive damages awards must be calculated.
Bayer said it would appeal the latest ruling.
There is meanwhile growing unease about Italy’s row with the EU over its purse-busting budget, which Brussels said breaks the bloc’s financial rules.
The populist government in Rome has refused to back down and cut its spending promises despite warnings about the country’s economic outlook.
The standoff comes as officials struggle to hammer out a Brexit agreement with a deadline for Britain to leave the EU looming in the background.
Pressure is also growing on Saudi Arabia after it admitted that a journalist critical of Riyadh had been killed at its Istanbul consulate.
Oil prices slid Tuesday as the market discounted concerns about potential supply disruptions in the Middle East.
Saudi Arabia said Monday it had no plans to repeat its harsh 1973 oil embargo, even as relations with the West sour following the death of Khashoggi.
In stocks, Wall Street closed mixed Monday as investors wait on company earnings.
The sharp losses Tuesday in Asia brought an end to a rally in previous sessions fuelled by China’s top brass issuing coordinated statements of support for the country’s markets and officials unveiling tax cut plans.
Nerves have been tested by US President Donald Trump’s warning that he will pull out of a nuclear treaty with Russia and bolster America’s arsenal.
Traders are also turning their attention to next month’s US midterm elections, which could turn control of Congress over to the Democrats.
Key figures around 0900 GMT
London – FTSE 100: DOWN 1.1 percent at 6,966.10 points
Frankfurt – DAX 30: DOWN 2.3 percent at 11,262.21
Paris – CAC 40: DOWN 1.6 percent at 4,970.24
Milan – FTSE MIB: DOWN 1.1 percent at 18,750.36
EURO STOXX 50: DOWN 1.6 percent at 3,138.01
Tokyo – Nikkei 225: DOWN 2.7 percent at 22,010.78 (close)
Shanghai – Composite: DOWN 2.3 percent at 2,594.83 (close)
Hong Kong – Hang Seng: DOWN 3.1 percent at 25,346.55 (close)
New York – Dow: DOWN 0.5 percent at 25,317.61 (close)
Euro/dollar: UP at $1.1470 from $1.1466 at 2100 GMT
Pound/dollar: UP at $1.2995 from $1.2967
Dollar/yen: DOWN at 112.20 from 112.81 yen
Oil – Brent Crude: DOWN $1.05 at $78.78 per barrel
Oil – West Texas Intermediate: DOWN 59 cents at $68.77.
Nigeria’s stock market rebounded this week with the all share index reaching a 10-month high, following improved stability and liquidity in the currency space and stability in the macro environment, as the MPC, left key parameters unchanged.
The key index added 3.38 percent to close at 29,064.52, boosted by Friday’s gain of 2.10 percent.
The banking index recorded the largest gain, owing to demand for the shares of Gtbank, Zenith Bank And Stanbic IBTC.
Market breadth remained positive, with 41 gainers topped by UAC-Property with 25.88 percent versus 25 losers led by Cadbury with 11.55 percent.
Total volume traded declined by 17.35 percent to 1.88 billion shares, with Diamond Bank, Access, and Zenith Bank accounting for 42.60 percent of the market volume.
The value of trades also reduced by 18.92 percent to N20.05 billion.
The Securities and Exchange Commission has unveiled plans introduce a new three-step account opening and requirements process for low-income earners and financially excluded people and in the country.
According to a statement released by the from the commission over the weekend says the initiative is also part of efforts to widen the domestic investors’base in the market.
The stock market regulator said the new process will simplify identifications with no specified minimum investment deposit. It added that the move will also help increase the domestic investors’ base of the capital market.
Less than three per cent of the population invests in the stock market, a situation that narrows the national capital formation process and subjects the market to extreme fluctuations of foreign portfolio investors.
Under the new process, any Nigerian that can supply basic information (name, passport-sized photograph, place of birth, nationality, gender, home location and address and telephone number) can open a stock market investment account with a whatever minimum balance the person chooses.
This eliminates provision of documentary evidence for verification.
Within the proposed three-step ‘Know-Your-Customer’ process, requirements for registration are based on the category of the investor. Potential investors are grouped into three categories- low-risk , medium-risk account and high-risk accounts.
Operators within the market are expected to move accounts to the next level as soon as they exceed the stipulated maximum cumulative balance for each investment category.
In the low-risk category there is no minimum investment amount to open the account and the account may be opened through a registered stockbroker and can be done by telephone.
This category also allows investments to be made by the account holder or third parties but with a limitation on transfer of funds to other accounts.
While the low-risk account is limited to one account per person for each capital market operator, the maximum single deposit for the account is N20,000 while the maximum cumulative balance is N200,000.
The board of SEC is expected to approve the proposed investment framework.
Financial markets across Nigeria are closed for the country’s 56th independence holiday.
Markets had closed on Friday to reopen tomorrow, Tuesday October 4.
Before the holiday, the financial markets had closed largely bearish but marginal gains were recorded in the equity market.
The last trading in September ended marginally positive as the all share index and market capitalisation rose further by more than a quarter of a percent, on the back of price advance by some mid-cap stocks.
However, market breadth was negative with 16 gainers against 22 losers on the price table.
The top three gainers for the day were Pharmadeko, NAHCO and Honeywell Flour Mills while Caverton, Nothern Nigeria Flour Mills and Conoil were the three most significant decliners.
Friday’s transaction was lower than the previous session, as it recorded a total turnover of 217.8 million shares worth 2.38 billion naira in 2,804 deals.
The most traded stocks were banking giants, Ecobank Transnational Incorporated, FCMB and Zenith Bank.
Research analysts believe that markets direction will be shaped by the third quarter numbers this week as yields in the local bonds market tend to inch higher.
Meanwhile, the Central Bank plans to auction 135.7-billion-naira worth of treasury bills on Wednesday with a view to curb speculations against the naira at the foreign exchange market as well as inflation.
An Economist, Dr Abiodun Adedipe, on Saturday said that the controversial suspension of the CBN governor, Lamido Sanusi, is “a very critical issue for our economy” stressing that the manner in which the act was carried out will affect the economy and that the Federal Government’ s claim that it wouldn’t is merely a ‘political statement.’
Speaking on Sunrise (Saturday), Dr Adedipe said “Immediately that pronouncement was made, the exchange rate market began to react. Also the stock market started to react,” maintaining that macroeconomic indices began to move in adverse directions.
According to him “the major issue is new capital formation “which is simply new investment.” He added that “any investor, whether domestic or foreign, will naturally look at the development and say it is not the time for me to put in fresh money.”
“Ultimately, if we get back on track, that little space of time where we lost momentum willensure that the prospect for growth that the economy had at the beginning of the year will certainly fall short by the end of the year.”
He stressed that the position of the CBN Governor is very key to the financial industry and the national economy hence comments made by the person in the position are important and are key indicators of the direction of policy and response of the system to developments in the economic space.
“Whatever actions are taken or utterance made by such a person is a reflection of the data and information available to him.
The way the government deals with whoever is in that position becomes important and that is why in my opinion, the government has not handled it in a way that will help this economy.”
While speaking on the programme, Social Commentator, Biodun Sowunmi, said that, that the suspended CBN governor erred “may not necessarily be in doubt”
“The fact of the matter is that there are so many allegations made against Sanusi. Whether they are right or not, we don’t know because it has not been investigated.
However, “where people have problems now is not whether there are no issues, indictments against Sanusi. They are mere allegations which have not been investigated. The real issue is whether the president has the powers under the law to suspend Sanusi.”
He stressed that the president has a right to appoint, nominate while the Senate confirms. “That means the President is sharing that authority with Senate and when it comes to the issue of removal, it’s only under section 1F that made an explicit provision that you can only remove the governor of Central Bank if for instance the President recommends the removal and is backed by two-thirds of the Senate.”
He continued by saying “interestingly, there’s only one aspect of section 11 that made reference to removal. The section relating to that is section 11(1)(D), you can only be suspended from office if the professional body that he belongs to finds him guilty of one thing or the other.
“There’s no provision for suspension, there’s only provision for removal and you can only suspend somebody if he has been found guilty by his professional body. That is not the case.”
He attributed the suspension to the president’s desire to accelerate his transformation agenda.
The Special Adviser to President Goodluck Jonathan of Nigeria on Media and Publicity, Dr Reuben Abati, has insisted that the President has handled the affairs of the country very well and remains focused to fulfil his New Year promises to Nigerians.
Abati said on Channels Television’s ‘Politics Today’ that at the begin of 2013, the President promised that all the successes he achieved in the previous year would be consolidated upon in 2013, and that he has done creditably well.
Speaking from the Abuja studio of Channels TV, Dr Abati referred to 2013 as a productive year for the country in infrastructure development. He cited several achievements of the administration, with ongoing and completed projects in transportation, aviation, including the dredging of the River Niger.
He also noted that many companies are already benefitting from the development, as cement companies have started transporting their goods via the railway system.
The Presidential Spokesman also cited the aviation sector as one in which the President scores high in infrastructure development as many airports are being rehabilitated and constructed.
As expected, the power sector privatisation was also lauded by Dr Abati, as he boasted that the process has been adjudged transparent, efficient and open by many international bodies; a testimony to the efficiency of President Goodluck Jonathan, with promises that in 2014 there would be more efficiency.
He was however asked to clarify the news that a Canadian firm wanting to construct the fast rail system in Nigeria has not been well embraced by the Jonathan administration, Abati chose to answer this with the ratings of Nigeria’s investor friendly status globally.
He stated that for any company saying there had been no success in its quest to invest in Nigeria, if they are qualified they would be successful, adding that Manitoba Hydro is a Canadian company that is doing business in Nigeria.
Abati also reacted to questions in the media about the decision of the government to revive the Nigerian railway system after 17 years of its death by bringing the old locomotive system back, when the world is moving past such technology.
He argued that when President Jonathan came on board, the railway system was comatose, “so what we did was to rehabilitate what existed”. He claimed that there are still plans to upgrade and modernize. He also said that the Lagos-Ibadan Express road project is a proof of Jonathan’s commitment to making things easier for Nigerians.
Dr Abati also shared his views on education, and the government’s sensitivity to labour unions with examples made of the Academic Staff Union of Universities, ASUU, and the Nigerian Medical Association, NMA.
He warned that they (unions) should show understanding because “at the end of the day this is about our country and people should not politicize issues.” He insisted that the President is serious about his New Year statement that all efforts to pick on the initiatives of his administration will not discourage him.
Abati also noted that the criticisms in the 18-page open letter from former president, Olusegun Obasanjo to President Jonathan have been addressed by the President himself in the first paragraph of his reply.
He added that the open reply would not have been necessary because most of the issues have been discussed by both men since Obasanjo has been a regular visitor to President Jonathan, but the reply became only necessary based on demand.
He insisted “He will not be distracted as he has said” adding that the widely reported 7% economic growth and Stock Market growth are proofs that the administration was focused.
Speaking further, Dr Abati said that 2013 was also a lucky year in Nigeria even in sports as the country won many laurels and also was voted into the Security Council of the United Nations, which shows that the international community has high regards for the country.
He added that even the crisis from his own party, the People’s Democratic Party, PDP, would not affect the business of governance.
No Need To Continue
In a twist, Legal Practitioner, Ebun Adegorowa, who joined the programme from the Lagos studio went hard on Dr Abati’s claims of many successes and berated the Presidential Spokesman for his contradictory claims.
He said that Abati spoke as if he was talking about another country, as he wondered where the claimed developments existed.
“All projects are ongoing and you say cement companies are already benefitting”
He cited the problems in the aviation sector as getting worse, and the power situation becoming a case of “no power”.
Adegorowa, , in deflating Abati’s claims, reeled out his own list of international ratings in which Nigeria has been rated to have been woeful in leadership, corruption and economic development.
He wondered why Abati would mention football which has no relevance to the survival of the average Nigerian as part of the achievement of his boss.
He argued that if the only thing President Jonathan is interested in is holding on to power, then there is no need to continue.
Speaking further, he berated the administration’s attitude to the fight against corruption. He asked, “When EFCC has just 2 million in his account how will it fight corruption?”
“President Jonathan has failed us and he has no reason to continue”
In a swift dramatic response, Abati condemned Adegorowa for “just throwing tantrums” speaking out of ignorance as his arguments lacked information and knowledge. He claimed that he should be the one wondering if Ebun lived in the country.
Although Dr Abati took time to tackle all issues raised by Mr Adegorowa, Adegorowa insisted that if Obasanjo says he (Jonathan) has no idea, then he should be taken seriously.
Dr Abati while commenting on Adegorowa’s allegation that President Jonathan is not showing real commitment to fighting corruption in Aviation Minister, Stella Oduah’s case, said that an allegation does not amount to truth, it has to be proven and people cannot just be punished based on allegation.
He added that the House of Representatives has handled the matter and the President has also set up a 3-man panel to look into it; an action Adegorowa referred to as a way of avoiding responsibility.
Mr Ebun Adegorowa concluded by saying that President Jonathan is living on a borrowed time as he did not believe that he could do anything for Nigeria. He stressed that the desperately convened National Conference aimed at getting support for his 2015 ambition would not help him.
He explained that with the current situation whereby Jonathan is losing support with many of his party members “porting” to the opposition as he is fast losing the majority in the National Assembly, he cannot be focused on work.
He added that when he (the President) had full support he did not perform, let alone when he is losing his supporters. He advised that he should “just pack up” and leave.
The Indian rupee has hit a record low against the dollar despite recent efforts to prop-up the currency. On Wednesday India’s central bank put further restrictions on the amount of money that companies and individuals can send out of the country.
That had little impact and the rupee fell to 62.03 to the dollar, below its previous low of 61.80 hit on 6 August. Overseas investors have been pulling money out of Indian shares and debt on concerns over the economy.
According to official data, international investors have withdrawn $11.58bn in shares and debt from India’s markets since the beginning of June.
India’s economy had been growing at a fast clip, reaching annual growth of 9%. In recent months, it has seen a sharp decline largely because of a slowdown in its manufacturing and services sectors.
“There is a complete lack of faith in the markets. There are fears that the RBI (Reserve Bank of India) measures may not help improve the rupee,” said Param Sarma, chief executive with NSP Forex.
Indian authorities are concerned that the weak rupee is stoking inflation.The nation relies on imports of crude oil, chemicals and some foodstuffs, which are priced in dollars.
The weak rupee makes those more expensive, a cost that is eventually handed on to the consumer.
In July, India’s main gauge of inflation, the Wholesale Price Index, was 5.79% higher than a year earlier, up from 4.86% in June