By Kevin Deutsch
The City of Coral Springs Police Officers’ Pension Plan has filed suit against Twitter co-founder Jack Dorsey, and several other board members of Block Inc., a payment processing company the pensioners say made a “highly unfair” acquisition of music mogul Jay-Z’s “failed” music streaming service, costing investors dearly, court records show.
The suit, mounted on behalf of the local pension plan by the law firm Saxena White P.A., of Boca Raton, challenges last year’s $237 business deal made by Block, formerly Square Inc., which the pensioners claim “[wiped] out billions of dollars of market capitalization,” and triggered a seven percent plunge in Square’s stock price, according to the documents.
Last month, the suit was filed in chancery court in Delaware, where Square is incorporated, and unsealed this week.
The Coral Springs Police Officers retirement and pension plan control millions in investment assets, financial disclosure records show.
“Plaintiff is, and at all relevant times has been a beneficial owner of Square common stock,” the suit states.
Now known as Block, the tech company Square had no experience with music streaming but still acquired a majority stake in the “troubled” streaming service Tidal, then “beset by controversy,” including criminal allegations of inflating its streaming numbers, according to the complaint.
Tidal was plagued “almost from day one by a maelstrom of dysfunction and controversy,” the suit states.
Dorsey, Block’s founder, CEO, and controlling stockholder forced the Tidal acquisition through anyway; not because it made good business sense, but because of his “close personal” friendship with Jay-Z, real name Shawn Carter, who wanted to “dump” his stake in the allegedly failing streaming platform, the complaint states.
The men allegedly plotted the acquisition during a yacht cruise they took together in the Hamptons in 2020, the court papers state, alleging a breach of fiduciary duty.
“The market appears to recognize the deal for what it was: a strategically dubious transaction at a wildly inflated valuation, obviously driven by Dorsey’s personal friendship with Carter and reflecting a significant governance failure at the company,” the suit alleges.
The complaint, which seeks unspecified damages, does not name Tidal or Jay-Z —currently a board member at Block—defendants.
A photo of Jay-Z and Jack Dorsey included in the complaint.
In addition to Dorsey, the suit names other Square board members as defendants, including former U.S. Treasury Secretary Lawrence Summers, for allegedly “consciously disregarding their duty to exercise appropriate oversight of Dorsey.”
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