NEW YORK, March. 1 /PRNewswire/ -- Dreier LLP (http://www.dreierllp.com/) today announced that a class action lawsuit was commenced in the United States District Court for the Western District of Missouri, on behalf of purchasers of the common stock and/or call options and/or sellers of put options of NovaStar Financial, Inc. ("NovaStar" or the "Company") during the period May 4, 2006 through February 20, 2007, inclusive (the "Class Period"). The complaint alleges violations of the federal securities laws, including Section 10(b) of the Securities Exchange Act.
If you purchased NovaStar common stock or call options during the Class Period or sold NovaStar put options during the Class Period, you may be a member of the proposed Class. You must move the Court on or before April 24, 2007 if you wish to serve as a lead plaintiff. Lead plaintiffs must meet certain legal requirements. To learn more about this lawsuit or if you are interested in serving as a lead plaintiff, please contact Plaintiff's counsel, Daniel B. Scotti (
NovaStar is a real estate investment trust ("REIT") that is headquartered in Kansas City, Missouri. The Company describes itself as a specialty finance company that originates, invests in and services residential nonconforming loans. The Complaint alleges, among other things, that: (i) NovaStar's reported financial results during the Class Period were falsely inflated; (ii) Defendants misrepresented the quality of the Company's mortgage loan portfolio and its ability to pay dividends; (iii) Defendants failed to disclose that the Company's reported financial results and projections were based upon faulty assumptions because of inadequate internal controls; and (iv) Defendants failed to disclose that the Company lacked a reasonable basis to make projections regarding its ability to maintain its status as a REIT. The Complaint further alleges that, as a result of these false statements and omissions, NovaStar's securities traded at artificially inflated or distorted prices. On February 20, 2007, after the close of trading, NovaStar shocked the market by announcing disappointing fourth quarter and year end 2006 financial results and warning that the Company expected to make very little, if any, REIT taxable income for the next four years. In reaction to this news, the price of the Company's stock declined more than 30% on extremely high trading volume. The Plaintiff seeks to recover damages on behalf of all members of the proposed Class.
The Plaintiff is represented by Dreier LLP and Gutride Safier LLP. Dreier LLP's Class Action Litigation Group has vast experience representing domestic and foreign institutional and individual investors in securities and other class actions throughout the country. The partners who head Dreier LLP's Class Action Litigation Group have successfully prosecuted securities fraud class actions in a wide variety of industries and have played a significant role in cases that have resulted in some of the largest securities class action settlements.
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