NEW YORK, April 6, 2006 (PRIMEZONE) -- Wechsler Harwood LLP today announced that it has filed a class action suit on behalf of all securities purchasers of H&R Block, Inc. ("H&R Block" or the "Company") (NYSE:HRB) during the period February 24, 2004 through March 14, 2006, both dates inclusive (the "Class Period").
The action, entitled, Kadagian v. H&R Block, Inc., et al., Case No. 06-CV-2306, is pending in the United States District Court for the Southern District of New York, and names as defendants, H&R Block, Inc., Mark A. Ernst, James W. Yabuki, and William Trubeck. A copy of the complaint can be obtained from the Court or can be viewed on the Wechsler Harwood web site at: www.whesq.com.
The Complaint charges defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More specifically, the complaint alleges that, during the Class Period, the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that H&R Block engaged in deceptive consumer practices by offering plans such as the Express IRA plan and the RALs program; (2) that H&R Block derived substantial revenue from these practices, thereby artificially inflating the Company's reported earnings; (3) that the Company improperly accounted for the effective income tax rate; and (4) that as a consequence of the foregoing, the Company's financial results were materially overstated at all relevant times.
In addition to concealing the false and misleading nature of the Company's financial statements, defendants also concealed the Company's potential exposure to lawsuits stemming from the fraudulent nature and operation of H&R Block's investment products. Unbeknownst to investors, defendants induced their customers to open investment accounts, using a marketing strategy that consistently misrepresented the benefits and concealed the deficiencies of those accounts.
On February 23, 2006, after the close of the markets, defendants shocked investors with the news that the Company's management and its Audit Committee, in consultation with the Company's independent auditors, KPMG LLP, would undertake a restatement of the Company's previously issued consolidated financial statements, including fiscal year 2006 quarterly financial statements and financial statements for the fiscal years ended April 30, 2005 and 2004.
Finally, on March 15, 2006, investors learned of a $250 million lawsuit by the New York Attorney General, addressing fraudulent marketing practices involving the Company's IRA products. The suit deflated the expectations of the investment community, in reliance on promised results from the Company's Financial Advisory segment. On this news, the price of H&R Block shares tumbled, from the previous close of $22.00 on March 14, 2006, to close $20.63 on March 15, 2006, for a loss of $1.37 or another 6.2% percent, on volume of over 14 million shares, nearly seven times normal daily volume.
If you are a member of the class described above, you may, not later than May 16, 2006, move the Court to serve as lead plaintiff of the class, if you so choose. 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 Wechsler Harwood, or other counsel of your choice, to serve as your counsel in this action.
Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders, employee investors and consumers and is responsible for hundreds of millions of dollars in recoveries. You can obtain a copy of the complaint by visiting the Wechsler Harwood website at http://www.whesq.com or by contacting the firm directly. The Wechsler Harwood website contains detailed information regarding this matter and additional information about the firm. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact plaintiff's counsel Jeffrey M. Norton at 877-935-7400 (ext. 286) or a firm representative.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca