#USA #New York #Settlement #Block Inc. #Hach Rose

Landmark Settlement: Block, Inc. and Hach Rose Schirripa & Rehns LLP

Hach Rose Schirripa & Rehns LLP, commonly referred to as HRSR, has recently announced a significant proposed settlement amounting to $150 million on behalf of Block, Inc. This settlement arises from stockholder derivative litigation accusing Block's Board of Directors of neglecting their duties to supervise compliance with the Bank Secrecy Act (BSA) and anti-money laundering (AML) laws. Furthermore, the allegations highlight the Board's failure to respond adequately to various warning signs indicating that Block's widely used "Cash App" service was being manipulated for fraudulent activities, money laundering, drug trafficking, and other serious criminal offenses.

Subject to the necessary court approval, the $150 million in cash is set to be paid directly to Block by the defendants' insurers. This settlement stands as one of the largest financial recoveries achieved in a Caremark oversight case. Daniel Rehns, Co-Lead Counsel and Partner at HRSR, emphasized the significance of this resolution, stating, "This settlement delivers an exceptional result for Block and its stockholders. It returns $150 million directly to Block, a remarkable recovery given the challenges in proving an oversight claim under Delaware law."

Launched in 2013, Block's Cash App is designed to facilitate money transfers and has rapidly gained popularity. However, the complaint outlines that the platform's model made it susceptible to misuse, attracting fraudsters and criminals who exploited its "frictionless onboarding" process, which required minimal identifying information for account creation. The legal document accused Block's executives and board members of failing to establish robust monitoring systems to detect these risks and inadequately responding to critical red flags regarding the misuse of the platform.

In March 2023, a report surfaced revealing that Block had reportedly exaggerated the number of legitimate Cash App users, allowing criminal operations to thrive while taking a lax approach to compliance standards. The fallout from these alleged activities triggered various regulatory challenges for Block, introducing significant financial ramifications:

• - In January 2025, Block paid a hefty $80 million fine as part of a coordinated enforcement action led by 48 state financial regulators, addressing violations of BSA/AML regulations.
• - The following day, the Consumer Financial Protection Bureau demanded that Block provide up to $120 million in refunds and consumer redress, in addition to imposing a $55 million civil penalty.
• - In April 2025, Block faced a $40 million penalty from the New York Department of Financial Services for failing to maintain an effective AML program.
• - A separate settlement of $45 million was announced by the attorneys general of 46 states, coupled with an additional $20 million settlement from the Washington Attorney General later in July 2026.
• - Moreover, a staggering tentative $764 million settlement with the Department of Justice was declared in November 2026.

Alongside these developments, Block is still grappling with an associated securities-fraud class action linked to the alleged misconduct. Frank Schirripa, founding partner of HRSR, noted the stringent standards Delaware law imposes for director-oversight claims. He affirmed that, considering this legal landscape, securing a $150 million payment is an extraordinary achievement.

James Kelly, a shareholder, alongside HRSR, initiated an investigation into the alleged wrongdoings in March 2023. After a thorough two-year pre-suit inquiry, the team filed a detailed 117-page derivative complaint on April 24, 2025, asserting that certain fiduciaries at Block had breached their responsibilities by not effectively monitoring the company's compliance procedures and failing to address criminal activities on Cash App.

By June 2025, HRSR together with Block Leviton LLP were designated as co-lead counsel for the consolidated litigation titled, In re Block Inc. Shareholder Derivative Litigation. The defendants made several motions to dismiss the case, all of which were denied by the court on January 6, 2026. Subsequent attempts by the defendants to pursue an interlocutory appeal were also successfully opposed by the plaintiff.

In April 2026, the board of Block instituted a Special Litigation Committee (SLC), empowered to manage the company's response to the litigation. The SLC's request for a 180-day stay to facilitate its investigation faced opposition from co-lead counsel, allowing discovery to progress while the committee conducted its review.

Rehns commended the remarkable outcome, attributing it to the relentless and thorough efforts of the dedicated attorneys and staff involved in the case, noting that the rapid litigation pace allowed for a strong evidential foundation leading to this successful settlement.

The settlement agreement now awaits both preliminary and final approval from the court. More information regarding this settlement, the approval timeline, and stockholders' rights will be made available upon filing the settlement documents, accessible on the websites of the lead counsels and Block, Inc.

This case is formally identified as In Re Block Inc. Shareholder Derivative Litigation, No. 525-cv-01262, (N.D. Cal.).

About Hach Rose Schirripa & Rehns LLP

HRSR specializes in complex litigation across various fields, including securities, corporate governance, antitrust, consumer protection, and employment law. With a seasoned team boasting over 150 years of cumulative experience, the firm is recognized as a leading representative for institutional investors and individuals in these legal domains.