New York (AFP)

After the suicide of one of his clients, convinced that he had lost hundreds of thousands of dollars, the online broker Robinhood came under heavy criticism. Popular with millennials, the platform is accused by its detractors of trivializing stock market transactions.

Alexander Kearns ended his life on June 12 after discovering that his Robinhood brokerage account, where he bought and sold options, had a negative balance of more than $ 730,000.

"The emotional stress caused by such exposure to the market drove him to suicide," tweeted Bill Brewster, the cousin of the 20-year-old boy and Chicago-based financial analyst.

But according to the family of Alexander Kearns, the unclear interface of Robinhood and the complexity of the investments made him believe that he had taken on serious debt when his account was actually in credit.

In a blog note, Robinhood co-founders Vlad Tenev and Baiju Bhatt said they were "personally devastated by this tragedy" and promised changes, including strengthening the eligibility criteria for investing in options, l improvement of their financial education tools and better readability of their interface.

MM. Tenev and Bhatt also announced a donation of $ 250,000 to the American Foundation for Suicide Prevention.

- Democratize Wall Street -

Robinhood was born in 2013 with the ambition, according to its founders, to democratize access to the stock market by eliminating the commissions on each transaction to buy and sell shares, index funds (ETF) or options.

The company also offers services such as the purchase of fractional shares, which makes it possible to acquire part of the shares of particularly expensive companies, or the granting of a free share to new customers.

Emblem of "fintech", the broker has become very popular thanks to its mobile application, attracting a young clientele, addicted to smartphones.

The platform, which plays the interactivity card thoroughly, makes it possible to create lists of popular titles and celebrates each operation with a shower of virtual confetti.

In early May, Robinhood claimed more than 13 million accounts with particularly strong growth during the "Great Containment". This is more than heavyweights like Charles Schwab, TD Ameritrade or E * TRADE, even if the amount of assets managed by them is very much higher.

Robinhood's customers are essentially small holders, fond of speculative movements and attracted to penny stocks - a profile sometimes mocked by seasoned investors.

But Societe Generale analysts have studied the positions of platform users since the start of the year.

"The moment chosen to invest seems impeccable with a considerable revival of investments at the time when the equity markets plunged in mid-March", they noted, in a recent note.

- Responsibilities -

Since its inception, the Robinhood business model has questioned. In addition to fundraising and premium subscriptions, the platform is remunerated through commissions paid by market leaders whose orders it routes.

Common among brokers, this practice is sometimes denounced for its lack of transparency, far from the message conveyed by Robinhood.

The company has also experienced accidents along the way, notably its aborted attempt to offer its customers current and savings accounts, or the numerous breakdowns of its application.

But the most frequent criticism of the platform is its lack, if not absence, of safeguards.

"Robinhood makes it far too easy for inexperienced young investors, whose accounts show low balances, to venture into risky investments" that they do not control, regrets Tara Falcone, founder of ReisUP, an education firm financial.

The mobile application, for example, highlights cryptocurrencies, such as bitcoin, without overly warning about the possible dangers of such investments.

For Falcone, the founders 'announcements after Alexander Kearns' suicide are a step in the right direction, but Robinhood can and should go much further.

"The democratization of financial investments is a wonderful mission and they have clearly done a huge job in this direction," said the specialist in financial planning.

"But this kind of freedom involves great responsibilities. Part of it is the responsibility of the individuals who make these decisions, but I believe that Robinhood also has a responsibility towards its customers," she adds.

© 2020 AFP