Down 18% yesterday, up 9% today. Jackson Hewitt. They are a tax preparer. Yesterday, the DOJ and IRS accused a few of the franchisees (125 out of 6500 locations), all owned by the same guy, of falsifying income tax returns on a fairly large scale (around 1000 returns per location in 2006). It's unclear how much the tax preparers did to aid the cheating: they could have recommended some illegal deductions, or could have overlooked falsified records provided to them by the customers. If any of you are familiar with the business (I'm not), what I'm interested in knowing is, what is the potential, and probable, liability of the parent company monetarily and in damage to their reputation. The commentary on Yahoo has, as usual, run the gamut from "it's an isolated issue and the customers who provided falsified records are liable" to "Nobody will want to use them any more" and "Where there's smoke there's fire. This is another Enron."
All I know is that the underfoot gap was filled and the Fibonacci 50% retracement complete. As I said before, its going to 30 and maybe higher. For trade purposes, I will be out at 30. The filling of that gap is a bullish sign. VERY BULLISH. As for arrests, I dont care.
I misinterpreted the news items. The alleged shortfall was $70M across 100,000 returns, but that number represents all returns prepared at the accused franchisee's locations. It's estimated that 1/3 of the total number of returns contained fraudulent data.