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. 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 It was originally supposed to be bought by Cerberus Capital but the firm rescinded its offer.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.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
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.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV