This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

H&R Block Shares Hit Low on HSBC Suit

KANSAS CITY, Mo. ( TheStreet) -- H&R Block (HRB) hit a new 52-week-low on Monday after it said it is suing HSBC's (HBC) U.S. arm if it does not offer refund anticipation loans as tax season approaches.

H&R Block filed a complaint on Friday in the U.S. District Court for the Eastern District of Missouri for injunctive relief against HSBC Bank USA, and certain affiliates, according to an Securities and Exchange Commission filing.

H&R Block wants to require HSBC to perform its "contractual obligations under the HSBC Retail Settlement Products Distribution Agreement, dated as of September 23, 2005, as amended," the filing said. Apparently the contractual obligations include offering the popular refund anticipation loans, according to Dow Jones.

If HSBC does not make the loans available in the next two months, H&R Block will not be able to offer the products, the article says.

According to one analyst cited in the article, not offering the products would be a "material" hit to H&R Block's revenue and profitability.

H&R Block shares plunged as much as 13% on Monday to $10.76 on strong trading volume of about 20 million shares, at last check.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

The two firms did not comment to Dow Jones.

Refund anticipation loans have been a point of contention in the tax preparation business. Some critics have said the practice is an example of predatory lending.

The inability to offer inability to offer the products this year "would damage or destroy Block's relationships with the millions of clients who desire them, would injure Block's reputation and customer good will, and cannot be remedied by mere monetary damages," the suit said, according to Dow Jones. The suit would apparently give advantage to its competitors, Jackson Hewitt (JTX) and Intuit (INTU), among others, who do offer the loans, it said.

H&R Block is another financial firm that was hit hard by the housing downfall. Prior to the crisis, H&R Block owned a subprime mortgage lender, Option One. Option One's credit troubles put H&R Block in a tailspin once the housing crisis hit and put the business up for sale. It was originally supposed to be bought by Cerberus Capital but the firm rescinded its offer. Wilbur Ross ended up acquiring the servicing business.

H&R Block further retrenched by selling its financial advisors unit to Ameriprise Financial in 2008.

--Written by Laurie Kulikowski in New York.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs