KANSAS CITY, Mo., April 16, 2004 (PRIMEZONE) -- An investor sued NovaStar Financial Inc. (NYSE:NFI) today, claiming the mortgage lender and four top officers misled the public about the company's business operations.
Berman DeValerio Pease Tabacco Burt & Pucillo (www.bermanesq.com) filed the class action in the U.S. District Court for the Western District of Missouri. The lawsuit seeks damages for violations of federal securities laws on behalf of all investors who bought NovaStar common stock from October 29, 2003, through and including April 12, 2004 (the "Class Period").
Berman DeValerio has represented investors in class actions since 1982. To receive a copy of the complaint, you may contact the court, call the firm at (800) 516-9926 or go to http://www.bermanesq.com/pdf/NovaStar-Cplt.pdf.
The lawsuit claims that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, including U.S. Securities and Exchange Commission (SEC) Rule 10b-5.
The complaint names as defendants the company; Lance W. Anderson, who served as president and chief operating officer; Michael L. Bamburg, who served as senior vice president and chief investment officer; Scott Hartman, who served as chairman of the board and chief executive officer; and Rodney E. Schwatken, who served as vice president, secretary, treasurer, and controller.
According to the complaint, NovaStar fostered an aggressive-growth culture throughout the Class Period. NovaStar touted its rapid growth in earnings, production, and its securities portfolio and highlighted the increasing number of NovaStar-affiliated branch offices. In 2003, the company reported that it had doubled the number of branch offices in operation and that its earnings had more than doubled in 2003 to $112 million.
Significantly, NovaStar's stock price has nearly quadrupled in the past year, rising from $18.35 per share on April 11, 2003, to a Class Period high of $70.32 on March 23, 2004.
In reality, the complaint says, NovaStar falsely inflated the number of offices it operates. Moreover, the company grew so large, so quickly, that it failed to maintain regulatory compliance with its operations. In fact, many of NovaStar's branch offices were operating illegally during the Class Period.
On April 12, 2004, The Wall Street Journal published an article highlighting the risks of owning the company's stock and faulting NovaStar for failing to comply with state licensing rules. The article revealed to the investing public for the first time that the company had falsely inflated the number of branch offices in operation and that many of those branch offices were operating illegally.
On the heels of this news, the stock price plummeted on extremely high volume, closing at $37.50 per share, down $16.68 per share or 31% from the previous day's close.
If you purchased NovaStar Financial Inc. common stock from October 29, 2003, through and including April 12, 2004, you may wish to contact the following attorneys at Berman DeValerio Pease Tabacco Burt & Pucillo to discuss your rights and interests.
Deborah Gale Evans, Esq. Michael T. Matraia, Esq. One Liberty Square Boston, MA 02109 (800) 516-9926 law@bermanesq.com
If you wish to apply to be lead plaintiff in this action, a motion on your behalf must be filed with the court no later than June 14, 2004. You may contact the attorneys at Berman DeValerio to discuss your rights regarding the appointment of lead plaintiff and your interest in the class action, or you may submit information online at http://www.bermanesq.com/Securities/Signup1.asp?caseid=506. Please note, you may also retain counsel of your choice and need not take any action at this time to be a class member.
Berman DeValerio Pease Tabacco Burt & Pucillo prosecutes class actions nationwide on behalf of institutions and individuals, chiefly victims of securities fraud, antitrust law violations, and consumer fraud. The firm consists of 34 attorneys in Boston, San Francisco and West Palm Beach, Florida.