H&R Block Financial Advisors, Inc. ("H&R Block" or the Company) is an American tax preparation and investment company with operations in North America and Australia.

The original Complaint alleges that H&R Block violated section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, as well as other common law rules. The Complaint alleges that H&R Block committed this fraud through uniform sales presentations, omitting material facts in connection with the offer and sale of the Enron bonds including the serious and significant risks associated with the bonds due to Enron’s accounting and credit problems of which H&R Block was monitoring and well aware.

The Complaint further alleges, among other things, that H&R Block failed to disclose internal information about their own downgrading of Enron securities, as well as secret incentives to brokers, higher than the usual commissions, to dump the Enron bonds on unsuspecting clients, which information was only recently publicly revealed. Specifically, the Complaint alleges that during the Class Period, and unbeknownst to Plaintiffs and the Class members, Defendant had internally removed an Enron security from its approved list because of concerns about, among other things, the company’s debt ratings and the SEC investigation. The Complaint also alleges that similarly, H&R Block created a secret incentive system whereby registered representatives earned special sales credits of between $10 and $17.50 per Enron bond sold to Class members, more than double the typical commissions, in order to dump the Enron bonds as quickly as possible.

By the Memorandum and Order dated May 31, 2005, the Court grants the Defendants’ motion to dismiss without prejudice. If Plaintiffs intend to file an amended complaint, they shall do so within thirty (30) days of the order.


On June 30, 2005, the Plaintiffs filed a First Amended Complaint, and on August 1, 2005, the Defendant filed a motion to dismiss the First Amended Complaint.

According to the Judgment in a Civil Case, filed on October 27, 2005, the court grants Defendant’s motion to dismiss Plaintiffs’ First Amended Complaint with prejudice, except to the extent that Plaintiffs’ claims encompass individual allegations of violations of California law. These individual claims are dismissed without prejudice.