NEW YORK, March 17 /PRNewswire/ -- Wolf Haldenstein Adler Freeman & Herz
LLP today filed a class action lawsuit in the United States District Court
Western District of Missouri, Western Division, on behalf of all persons who
purchased the common stock of H&R Block, Inc. ("HRB" or the "Company")
(NYSE: HRB) between January 31, 2005 through March 14, 2006, inclusive, (the
"Class Period") against defendants HRB and Mark A. Ernst, the Company's
Chairman, President, and CEO.
The case name is Michael Nettie v. H&R Block, Inc., et al. A copy of the
complaint filed in this action is available from the Court, or can be viewed
on the Wolf Haldenstein Adler Freeman & Herz LLP website at
The complaint alleges that defendants violated the federal securities laws
by issuing materially false and misleading statements throughout the Class
Period that had the effect of artificially inflating the market price of the
In particular, in February 2005, California Attorney General Bill Lockyer
sued the Company over its highly publicized referral anticipation loans
("RALs") seeking "hundreds of millions of dollars" on behalf of customers and
$20 million in civil penalties. Mr. Lockyer's action joins a long list of
lawsuits that have targeted HRB's RALs -- cash advances that the Company
arranges for customers so they won't have to wait an extra one to four weeks
for a check from the federal government they are otherwise entitled to
receive. In return for the loans, customers must agree to give a percentage
of their tax refunds to HRB and its banking partners.
Further, the Company reported inflated earnings during the Class Period.
As reported on or about February 23, 2006, the Company must restate results
for fiscal 2004 and 2005, plus previous 2006 quarters, because of errors in
calculations regarding its state effective income tax rate. Reportedly, the
errors resulted in the Company understating state income tax liabilities by at
least $32 million as of the end of April 2005. Indeed, on March 13, 2006, the
Company announced it would delay filing its quarterly report on SEC Form 10-Q
until it has completely sorted out its problems.
Finally, on March 15, 2006, New York Attorney General Elliot Spitzer sued
HRB alleging that the Company over the last four years opened more than
500,000 "Express IRA" accounts, an individual retirement account ("IRA") that
can take the form of either a Traditional IRA or a Roth IRA, for clients of
its tax-preparation service; but 85% of the customers who opened the accounts
paid the Company fees in excess of what they earned in interest. According to
Mr. Spitzer's complaint, the program exploited lower income, working families
who were led to believe the plan presented an excellent opportunity to save
Mr. Spitzer's complaint further avers that Mr. Ernst was aware of the
improper fee practices along with other high-ranking members of management.
Revelations concerning the Company's improper practices concerning the
Express IRA scheme hammered the Company's stock. By late afternoon trading on
March 15, 2006, the Company's price per share was down 5.5% at $20.28;
earlier, shares traded as low as $19.80 per share, passing the previous
52-week low of $21.58 set on March 16, 2006.
HRB's use of these improper practices served to artificially inflate the
Company's reported earnings during the Class Period because the Company's
earnings were generated through an improper and unsustainable business
practice. Accordingly, the Company's Class Period statements concerning its
compliance with applicable laws and regulations were false.
Also, the Company, having disclosed the existence of -- and touted the
success of -- the Express IRA plan and the RALs program, was obligated to
disclose the risks associated with the business, including that members of
management, e.g., Mr. Ernst, were aware that these plans (or at least how they
were implemented) ran afoul of certain regulations. Failure to disclose this
information constituted material omissions, the ultimate disclosure of which
harmed the Company's stockholders.
If you purchased H&R Block common stock during the Class Period, you may
request that the Court appoint you as lead plaintiff by May 16, 2006. A lead
plaintiff is a representative party that acts on behalf of other class members
in directing the litigation. In order to be appointed lead plaintiff, the
Court must determine that the class member's claim is typical of the claims of
other class members, and that the class member will adequately represent the
class. Under certain circumstances, one or more class members may together
serve as "lead plaintiff." Your ability to share in any recovery is not,
however, affected by the decision whether or not to serve as a lead plaintiff.
You may retain Wolf Haldenstein, or other counsel of your choice, to serve as
your counsel in this action.
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 approximately 60 attorneys
in various practice areas; and offices in Chicago, New York City, San Diego,
and West Palm Beach. 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
If you wish to discuss this action or have any questions, please contact
Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue, New York, New
York 10016, by telephone at (800) 575-0735 (Gregory M. Nespole, Esq., Gustavo
Bruckner, Esq., Paulette S. Fox, Esq., or Derek Behnke), via e-mail at
email@example.com or visit our website at http://www.whafh.com. All e-mail
correspondence should make reference to HRB.
SOURCE Wolf Haldenstein Adler Freeman & Herz LLP