COLCHESTER, Conn., May 5, 2006 (PRIMEZONE) -- H&R Block, Inc. ("H&R Block" or the "Company") and certain insiders have been sued for violations of the federal securities laws. On March 23, 2006, Scott+Scott filed a complaint on behalf of a class of investors who purchased HRB securities during the period February 24, 2004 through March 14, 2006, inclusive (the "Class Period"), in the U.S. District Court for the Southern District of New York. The action alleges that defendants made numerous false and misleading statements regarding the Company's financial statements that served to artificially inflate the price of the Company's securities to the detriment of those who invested in HRB during the Class Period.
As early as July 2004, according to the lawsuit, defendants assured investors that, except for minor non-material issues with its accounting internal controls, the Company's accounting controls were effective. Yet, beginning in June 2005, defendants showed the market that they were unable to maintain effective internal controls to ensure accurate financial accounting by repeatedly restating the Company's previously released financial statements. First, on June 8, 2005, H&R Block revealed that it would restate its financial reports for its 2003 and 2004 fiscal years and the first three quarters of its 2005 fiscal year, as a result of numerous accounting errors amounting to tens of millions of dollars. Then, on February 23, 2006, defendants again shocked investors with the news that the Company would restate its fiscal year 2006 quarterly financial statements and would further restate financial statements for the 2004 and 2005 fiscal years.
The lawsuit also asserts that defendants concealed the Company's potential exposure to lawsuits stemming from the fraudulent nature and operation of their investment products. On March 15, 2006, investors learned that defendants induced H&R Block customers to open investment accounts, using a marketing strategy that consistently misrepresented the benefits and concealed the deficiencies of those accounts, when the New York Attorney General filed a $250 million lawsuit illuminating defendants' fraudulent marketing practices involving the Company's IRA products.
According to the investor class, the New York Attorney General's charges, in combination with the Company's prior corrective disclosures, demonstrate defendants' pervasive pattern of erroneous and misleading communications regarding the Company's products, financial statements and prospects.
If you purchased H&R Block securities during the Class Period and wish to serve as a lead plaintiff in the action, you must move the court no later than May 16, 2006. Any purported class member may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. If you wish to discuss this action or have questions concerning this notice or your rights, please contact Scott+Scott partner David R. Scott (drscott@scott-scott.com, 800/404-7770) or visit the Scott+Scott website, www.scott-scott.com, for more information. There is no cost or fee to you.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.