According to a press release dated March 17, 2006, 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 Company's securities.

The complaint alleges that 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 for retirement.

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.

The complaint alleges that 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. Several class actions purporting similar allegations have also been filed in the U.S. District Court for the Southern District of New York.

If you bought H&R Block, Inc. securities between January 31, 2005 and March 14, 2006, inclusive, and would like to obtain information about the H&R Block, Inc. lawsuit, then you are invited to call (866) 467-1400 to speak with an attorney.