MINNEAPOLIS, Feb. 28, 2007 (PRIME NEWSWIRE) -- Charles H. Johnson & Associates announces that 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) publicly traded securities during the period May 4, 2006 through February 20, 2007 (the "Class Period).
If you are a member of the proposed Class, you may move the court to serve as a lead plaintiff for the Class on or before April 24, 2007. You do not need to be a lead plaintiff in order to share in any recovery that may be obtained.
The Complaint alleges that NovaStar and certain of its officers and directors violated Federal Securities laws. Specifically, defendants concealed the following facts from the investing public: (i) NovaStar lacked requisite internal controls, and therefore its projections and reported results were based upon defective assumptions about loan delinquencies; (ii) NovaStar's financial statements were materially misstated as the Company failed to properly account for its allowance for loan losses; (iii) due to the increased volatility in the sub prime market, NovaStar would be forced to tighten its underwriting guidelines which would have a material impact on its loan production going forward; and (iv) given the increased volatility in the lending market, NovaStar had no reasonable basis to make projections about its ability to maintain its Real Estate Investment Trust ("REIT") taxable income. As a result, the projections NovaStar issued during the Class Period about its REIT taxable income and dividends were at a minimum reckless.
On February 20, 2007, after the market closed, NovaStar announced disappointing fourth quarter and year-end 2006 results and warned that it expected to earn little, if any, taxable income in the next five years. On this news, NovaStar's sock fell 42% to close at $10.10 per share on February 21, 2007.
If you purchased NovaStar Financial securities during the Class Period, or have any questions concerning this notice or your rights with respect to this matter, please contact:
Neil Eisenbraun, Esq. (cjohnsonlaw@gmail.com)
Charles H. Johnson & Associates
2599 Mississippi Street
New Brighton, MN 55112
(651) 633-5685
More information on this and other class actions can be found on the Class Action Newsline at www.primenewswire.com/ca/