updated 11/20/2007 1:51:08 PM ET 2007-11-20T18:51:08

H&R Block Inc. said Tuesday that Mark Ernst has resigned as chairman, president and chief executive of the tax preparation and accounting services company.

He is being replaced as chairman by former Securities and Exchange Commission boss Richard Breeden, who led a dissident shareholder group that won three seats on the board.

Former Aetna Inc. executive Alan Bennett was named interim CEO while H&R Block looks for a permanent replacement.

H&R Block shares slipped 10 cents to $18.97 in morning trading.

Breeden has criticized the company’s diversification into mortgage lending, investment advising and banking, saying it had robbed momentum from the company’s core tax preparation and accounting services business.

H&R Block has been restructuring in an effort to survive the collapse of the mortgage markets caused by rising interest rates and falling home prices.

It has been hurt by rising loan defaults at its subprime mortgage lending unit, Option One Mortgage Corp. Subprime loans are made to customers with poor credit histories.

A proposed sale of Option One to private equity firm Cerberus Capital Management is in jeopardy because of falling values but H&R Block is attempting to renegotiate the sale.

In September, investors replaced three members on H&R Block’s board of directors with Breeden and two of his appointees.

Ernst led the company’s proxy fight with Breeden over the new board members.

Ernst took over as CEO in January 2001 and was elected chairman in September 2002. He joined H&R Block in 1998 and was first elected to the board in 1999 when he was appointed president.

Before H&R Block, Ernst worked as a senior executive with American Express Co. for 12 years.

Breeden will serve as non-executive chairman. He has said he would speed up the process of selling Option One and may sell off other non-tax divisions, such as the year-old H&R Block Bank.

Bennett, who retired as chief financial officer at the insurer Aetna, will serve as CEO until a permanent replacement can be found, though he said he does not want to be considered for the permanent job.

H&R Block has formed a search committee to find a new CEO.

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