NEW YORK, April 27, 2004 (PRIMEZONE) -- Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) has filed a class action lawsuit against NovaStar Financial, Inc. ("NovaStar" or the "Company") (NYSE:NFI) and three of the Company's senior officers, on behalf of all persons or entities who purchased the securities of NovaStar during the period between October 29, 2003 through April 8, 2004, inclusive (the "Class Period"). The case was filed in the United States District Court for the Western District of Missouri (Western Division).
The complaint alleges that NovaStar, a specialty finance company which acquires single family residential subprime mortgage loans and purchases mortgage securities in the secondary market, and the Company's President W. Lance Anderson, CEO Scott F. Hartman, and Controller Rodney E. Schwatken, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing false and misleading statements which misrepresented the growth of the Company and its branch offices.
As alleged in the Complaint, throughout the Class Period defendants reported record growth in the Company's earnings, production, securities portfolio as well as highlighting the increasing number of NovaStar branch offices. The Company reported that in 2003, it had doubled the number of branch offices in operation as well as achieved record earnings growth. However, it is alleged that NovaStar failed to maintain regulatory compliance with its operations. Instead of disclosing that several NovaStar branches were operating illegally, defendants continued to tout NovaStar's accomplishments, thereby artificially inflating the price of the Company's stock. Defendant's perpetuated the illusion of impressive growth to sell $110 million worth of the company's equities to the investing public.
On April 12, 2004, The Wall Street Journal reported that the Company grossly overstated the actual number of branch offices NovaStar had in operation, as well as stating that NovaStar operated numerous offices illegally in multiple states. Following this announcement, the price of NovaStar shares fell almost 31%, from $54.18 to $37.50 per share.
If you purchased the securities of NovaStar during the Class Period, you have until June 14, 2004 to ask the Court to appoint you as one of the lead plaintiffs for the Class. In order to serve as lead plaintiff, you must meet certain legal requirements. If you wish to review a copy of the Complaint, to discuss this action or have any questions, please contact Andrew G. Tolan, Esq. of the Pomerantz firm at 888-476-6529 (or (888) 4-POMLAW), toll free, or at agtolan@pomlaw.com by e-mail. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
The Pomerantz firm, which has offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.
CONTACT: Andrew G. Tolan, Esq. of Pomerantz Haudek Block Grossman & Gross LLP, 888-476-6529 ((888) 4-POMLAW) or agtolan@pomlaw.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca