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Case Status:    DISMISSED    
On or around 09/23/2009 (Court's order of dismissal)

Filing Date: February 23, 2007



According to an article dated June 6, 2008, a federal judge in the Western District of Missouri has dismissed a securities class - action lawsuit against the company. In a June 4 opinion, Judge Ortrie Smith found that the amended complaint against the Kansas City-based subprime lender missed several procedural filing requirements. … Smith's opinion didn't leave the door open for an amended complaint, saying "such an effort would be futile" because the lawsuit either couldn't do a better job of framing the complaint or didn't think Smith would figure that the complaint was inadequate.

On August 20, 2007, the Court approved Lerach Coughlin Stoia Geller Rudman & Robbins LLP as designating class counsel. On October 19, 2007, a Consolidated Complaint For Violation Of The Federal Securities Laws was filed. The defendants responded by filing a motion to dismiss the Consolidated Complaint.

In a press release dated August 15, 2007, on July 9, 2007, the district court consolidated the actions. The district court found that Dr. Kevin Lester, who purchased 73,750 net shares during the class period, had the largest financial interest because he held the most shares and suffered the greatest loss. The district court appointed Lester as the lead plaintiff.

The original Complaint alleges that NovaStar and certain of its officers and directors violated Federal Securities laws. Specifically, defendants concealed the following facts: (i) NovaStar lacked requisite internal controls, and, as a result, the projections and reported results were based upon defective assumptions about loan delinquencies; (ii) NovaStar's financial statements were materially misstated due to its failure to properly account for its allowance for loan losses; (iii) given the deterioration and the increased volatility in the subprime market, NovaStar would be forced to tighten its underwriting guidelines which would have a direct material negative 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, which drives dividends, and potentially even its very status as a REIT. As a result, NovaStar's projections issued during the Class Period about its REIT taxable income and dividends were at a minimum reckless.

The complaint further alleges that on or around February 20, 2007, after the markets closed, NovaStar announced disappointing fourth quarter and year-end 2006 results and further warned that it expected to earn little, if any, taxable income in the next five years. On this news, NovaStar's stock fell 42% to close at $10.10 per share on February 21, 2007.

On July 1, 2008, the plaintiff filed a Notice of Appeal from the order dismissing the case. The appeal is currently pending in the U.S. Court of Appeals for the Eighth Circuit, case number 08-2452.

On September 23, 2009, an appellate mandate and judgment was entered by the appellate court. This appeal from the United States District Court was submitted on the record of the district court, briefs of the parties and was argued by counsel. After consideration, it was ordered and adjudged that the judgment of the district court in this cause is affirmed in accordance with the opinion of this Court.

COMPANY INFORMATION:

Sector: Services
Industry: Real Estate Operations
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: NFI
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: W.D. Missouri
DOCKET #: 07-CV-00139
JUDGE: Hon. Howard F. Sachs
DATE FILED: 02/23/2007
CLASS PERIOD START: 05/04/2006
CLASS PERIOD END: 02/20/2007
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Law Offices of Alfred G. Yates
    519 Alleghany Bldg., 429 Forbes Avenue, Law Offices of Alfred G. Yates, PA 15219
    412.391.5164 ·
  2. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    655 West Broadway, Suite 1900, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    619.231.1058 619.231.7423 ·
  3. Walters, Bender, Strohbehn & Vaughan PC
    2500 City Center Square, 1100 Main Street, P.O. Box 26188, Walters, Bender, Strohbehn & Vaughan PC, MI 64196
    816.421.6620 816.421.4747 ·
No Document Title Filing Date
COURT: W.D. Missouri
DOCKET #: 07-CV-00139
JUDGE: Hon. Howard F. Sachs
DATE FILED: 10/19/2007
CLASS PERIOD START: 05/04/2006
CLASS PERIOD END: 02/20/2007
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    655 West Broadway, Suite 1900, Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    619.231.1058 619.231.7423 · info@csgrr.com/
  2. Klafter & Olsen LLP (Washington)
    1250 Connecticut Ave., N.W. Suite 200, Klafter & Olsen LLP (Washington), DC 20036
    202.261.3553 202.261.3533 · info@klafterolsen.com
No Document Title Filing Date
No Document Title Filing Date