January 7, 2026
A California federal judge has ruled that the parent company of Square and Cash App, Block Inc., and its officers and directors must face claims of compliance failures in a class action and separate derivative suit, finding, among other things, that the derivative suit adequately pleads that Block’s board failed to properly oversee the company’s compliance program.
U.S. District Judge Noel Wise issued two orders on Tuesday denying dismissal motions from Block and the company’s top brass, including Twitter co-founder Jack Dorsey.
The derivative suit, filed in February 2025, claims that Block’s executives and board members breached their fiduciary duties to investors by concealing Block’s allegedly lax customer due diligence practices, leaving the company vulnerable to regulatory scrutiny and litigation.
By failing to put adequate safeguards in place, investors said, Block “allowed the company to become a haven for unlawful activities” such as money laundering, trafficking of people and drugs, and terrorism financing, among other things.
In declining to dismiss the suit on Tuesday, Judge Wise agreed with investors that demand upon Block’s board before the suit’s filing would have been futile because a majority of the board members were not independent and faced a substantial likelihood of liability for the allegations in the complaint.
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The investors in the class action are represented by Richard M. Heimann, Katherine Lubin Benson, Courtney J. Liss, Steven E. Fineman, Daniel P. Chiplock, Nicholas Diamand and Gabriel A. Panek of Lieff Cabraser Heimann & Bernstein LLP and Julie Goldsmith Reiser, Claire Marsden, Michael B. Eisenkraft and Benjamin F. Jackson of Cohen Milstein Sellers & Toll PLLC.
Read Block Inc., Dorsey Must Face Suits Over Compliance Claims.