Watch List Update: H&R Block - Possible SEC Investigation, Delays in Disclosure of an Earlier Probe


The Probes Reporter™ Watch List tracks those companies involved in undisclosed SEC investigative activity.  Names are added to and removed from this list frequently based on responses we receive to Freedom of Information Act (FOIA) requests we file with the SEC.  This is our latest update.

H&R Block, Inc. (HRB)   
Possible, Undisclosed SEC Investigation 
Added to Watch List

Our Take:  We're not sure what's going on with the SEC and HRB today or if it would even matter to investors.  However, it's our opinion that the record shows HRB's track record for disclosing a sizable and protracted SEC probe in the past was weak.  That raises the risk investors could be harmed by delayed disclosure if the current probe we found turns out to be something meaningful.  

  • 31-Jul-2014:  The SEC cites the "law enforcement exemption" of the FOIA as basis to deny the public access to the detailed records we sought on this company.  As a matter of law, they are acknowledging some sort of investigative activity. No disclosure of SEC investigative activity was found in the past two years.  We filed an administrative appeal to challenge this denial.
  • 24-Jul-2013:  SEC indicates no recent investigative activity found.
  • 12-Sep-2012:  SEC indicates no recent investigative activity found. 

    Also in Sep-2012, the SEC informed us there were, “approximately seven boxes of investigative records, 200,000 documents, and hundreds and/or thousands of emails” from an earlier investigation of this company.  We do not have those records but believe they are related to the SEC action taken against the company in April-2012.
  • From the 10-K filed 26-Jun-2012:  "On April 24, 2012, the U.S. Securities and Exchange Commission (SEC) simultaneously filed a complaint, in the United States District Court for the Central District of California styled United States Securities and Exchange Commission vs. Option One Mortgage Corporation n/k/a Sand Canyon Corporation (Case No. SACV 12-633-JST (MLGx)), and a proposed settlement in connection with its investigation into RMBS transactions of SCC. The negotiated settlement, in which SCC neither admits nor denies the allegations of the complaint, calls for the payment of approximately $28 million in full settlement of all claims by the SEC. On April 26, 2012, the court filed a final judgment in accordance with the terms of the settlement agreement, concluding the matter. SCC accrued a liability of approximately $28 million in connection with this matter during the quarter ended January 31, 2012 and payment was made in the first quarter of fiscal year 2013."

    From the 10-Q filed Mar-2012:  "SCC has been working with the staff of the U.S. Securities and Exchange Commission in connection with the staff’s investigation of matters related to eighteen RMBS transactions of SCC. Based on the progress of the investigation, the scope of which has continued to narrow in focus, SCC has offered to resolve the matter with the payment of approximately $28 million. As a result, SCC has established a liability as of January 31, 2012, which is included in our loss contingency accrual. Although we believe that this matter can be resolved on satisfactory terms, any resolution of this matter would require approval by the U.S. Securities and Exchange Commission and of the U.S District Court, neither of which has been obtained, and which we cannot provide assurance will be obtained on satisfactory terms or at all."

    No disclosure of SEC investigative activity was found in the two years prior to Mar-2012. 

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Notes: The SEC did not disclose the details on investigations referenced above. The SEC reminds us that its assertion of the law enforcement exemption should not be construed as an indication by the Commission or its staff that any violations of law have occurred with respect to any person, entity, or security.  New SEC investigative activity could theoretically begin or end after the date covered by this latest information which would not be reflected here.