| Company: | NovaStar Financial, Inc. |
| Ticker Symbol: | NYSE: NFI |
| Class Period: | May 4, 2006 to February 20, 2007 |
| Date Filed: | Feb-23-07 |
| Lead Plaintiff Deadline: | Apr-20-07 |
| Court: | Western District, MO |
| Allegations: |
A class action has been commenced in the United States District Court for the Western District of Missouri on behalf of purchasers of NovaStar Financial, Inc. ("NovaStar") (NYSE:NFI) common stock during the period between May 4, 2006 and February 20, 2007 (the "Class Period").
The complaint charges NovaStar and certain of its officers and directors with violations of the Securities Exchange Act of 1934. NovaStar operates as a specialty finance company that originates, purchases, invests in and services residential nonconforming loans.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business and financial results. As a result of defendants' false statements, NovaStar stock traded at artificially inflated prices during the Class Period, reaching a high of $37.59 per share in May 2006.
On February 20, 2007, after the markets closed, NovaStar announced disappointing fourth quarter and year-end 2006 results and further warned that the Company expected to earn little, if any, taxable income in the next five years. On this news, NovaStar's stock collapsed to close at $10.10 per share on February 21, 2007, a one-day decline of 42%, on volume of 22.4 million shares, 15 times the average three-month volume.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company lacked requisite internal controls, and, as a result, the Company's projections and reported results issued during the Class Period were based upon defective assumptions about loan delinquencies; (b) the Company's financial statements were materially misstated due to its failure to properly account for its allowance for loan losses; (c) given the deterioration and the increased volatility in the subprime market, the Company would be forced to tighten its underwriting guidelines which would have a direct material negative impact on its loan production going forward; and (d) given the increased volatility in the lending market, the Company had no reasonable basis to make projections about its ability to maintain its Real Estate Investment Trust ("REIT") taxable income, which drives dividends, and potentially even its very status as a REIT. As a result, the Company's projections issued during the Class Period about its REIT taxable income and dividends were at a minimum reckless.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
The complaint charges NovaStar and certain of its officers and directors with violations of the Securities Exchange Act of 1934. NovaStar operates as a specialty finance company that originates, purchases, invests in and services residential nonconforming loans.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business and financial results. As a result of defendants' false statements, NovaStar stock traded at artificially inflated prices during the Class Period, reaching a high of $37.59 per share in May 2006.
On February 20, 2007, after the markets closed, NovaStar announced disappointing fourth quarter and year-end 2006 results and further warned that the Company expected to earn little, if any, taxable income in the next five years. On this news, NovaStar's stock collapsed to close at $10.10 per share on February 21, 2007, a one-day decline of 42%, on volume of 22.4 million shares, 15 times the average three-month volume.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company lacked requisite internal controls, and, as a result, the Company's projections and reported results issued during the Class Period were based upon defective assumptions about loan delinquencies; (b) the Company's financial statements were materially misstated due to its failure to properly account for its allowance for loan losses; (c) given the deterioration and the increased volatility in the subprime market, the Company would be forced to tighten its underwriting guidelines which would have a direct material negative impact on its loan production going forward; and (d) given the increased volatility in the lending market, the Company had no reasonable basis to make projections about its ability to maintain its Real Estate Investment Trust ("REIT") taxable income, which drives dividends, and potentially even its very status as a REIT. As a result, the Company's projections issued during the Class Period about its REIT taxable income and dividends were at a minimum reckless.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
