Block Inc. (NYSE: SQ)
NEW YORK, NY – February 8, 2023 – Wolf Haldenstein Adler Freeman & Herz LLP announces that a federal securities class action lawsuit has been filed in the United States District Court for the Northern District of California on behalf of persons and entities who purchased or otherwise acquired Block Inc. (NYSE: SQ) (“Block” or the “Company”) securities during the period November 4, 2021 and April 4, 2022, including all former shareholders of Afterpay securities who acquired unregistered Block, Inc. Class A common stock (and/or corresponding SQ CHESS Depository Interests) in direct exchange for Afterpay shares pursuant to Block’s January 31, 2022 acquisition and stock-for-stock merger with Afterpay.
All investors who purchased shares and incurred losses are advised to contact the firm immediately at firstname.lastname@example.org or (800) 575-0735 or (212) 545-4774.
If you have incurred losses, you may, no later than April 3, 2023, request that the Court appoint you lead plaintiff of the proposed class. Please contact Wolf Haldenstein to learn more about your rights.
The filed Complaint alleges that Block operates a payment platform aimed at small and medium sized businesses, which allows them to accept credit card payments and to use tablet computers as payment registers for point-of-sale systems. Block offers a payment application called Cash App, which was initially designed to make Peer-to-Peer payments. Cash App has since been configured for additional uses including direct deposit payments, purchase of cryptocurrency and other investments. Cash App users are required to provide the Company with personally identifiable information to open an account on the platform.
On August 1, 2020, Block (then known as Square) announced that Block and Afterpay, an independent Australian public company, reached agreement on the terms of a recommended acquisition of Afterpay by Block. According to the Merger’s terms, Block would acquire all outstanding ordinary shares of Afterpay in exchange for 0.375 shares of Square. The Company stated that it would rely on the exemptions under Section 3(a)(1)10 of the Securities Act to issue the new shares.
Although shareholders approved the transaction, it is alleged that the misrepresentations underlying the fairness hearing and approval prevent the Block shares from qualifying for the Section 3(a)(10) exemption. Failure to strictly comply with Section 3(a)(10)’s requirements causes any corresponding offers or sales of these unregistered securities to be in violation of Section 5. Accordingly, the defendants were required to register newly issued Block shares, failed to ensure compliance with Section 3(a)(10)’s requirements, and affirmatively misrepresented and withheld an array of critical information from the New South Wales Court conducting the fairness hearing with respect to the Merger.
Before the Class Period began, Cash App user accounts had been hacked on numerous occasions resulting in transfer of customer funds. Many affected users found it nearly impossible to reach a live representative to discuss the security breaches. From February 2020 through March 2021, the Better Business Bureau received and reviewed 2,485 complaints concerning Cash App and 3,532 concerning Square. In 2020, before the Merger, Cash App user reviews mentioning the words “fraud” or “scam” increased by 335%.
An August 2021, Medium article discussed the proliferation of hacking attacks on Cash App and Block’s lack of response. Therein, the Company’s numerous security breaches and breakdowns were blamed on the lack of adequate internal controls.
On November 4, 2021, the Company filed its Quarterly Report with the SEC. Therein, the Company disclosed the hypothetical risks security breaches could adversely affect the Company’s business.
On December 17, 2021, Block notified its shareholders that a fairness hearing was conducted in the New South Wales Court, which approved the transaction based on defendants’ representations.
At the time of the Merger exchange on January 31, 2022, defendants had still made no disclosure of the early December 2021 data breach. It was not until April 4, 2022, that Block revealed a massive data breached occurred four months earlier, before the December 17, 2021 fairness hearing before the New South Wales Court and well before the January 31, 2022 Merger exchange. The Company admitted that a “former employee downloaded certain report of its subsidiary Cash App Investing LLC on December 10, 2021, that contained some U.S. customer information” and according to Block, the information was “accessed without permission after their employment ended.” The Company also revealed that the information accessed included customer personal information.
Wolf Haldenstein has extensive experience in the prosecution of securities class actions and derivative litigation in state and federal trial and appellate courts across the country. The firm has attorneys in various practice areas; and offices in New York, Chicago and San Diego. The reputation and expertise of this firm in shareholder and other class litigation has been repeatedly recognized by the courts, which have appointed it to major positions in complex securities multi-district and consolidated litigation.
If you wish to discuss this action or have any questions regarding your rights and interests in this case, please immediately contact Wolf Haldenstein by telephone at (800) 575-0735 or via e-mail at email@example.com.
Wolf Haldenstein Adler Freeman & Herz LLP
Patrick Donovan, Esq.
Gregory Stone, Director of Case and Financial Analysis
Email: firstname.lastname@example.org, email@example.com or firstname.lastname@example.org
Tel: (800) 575-0735 or (212) 545-4774
Certification and Authorization Pursuant to Federal Securities Laws
Date of signing: 03/28/2023