NovaStar Hit With Another Suit

Yet another class action lawsuit has been filed in the U.S. District Court for the Western District of Missouri against NovaStar Financial Inc., Kansas City, Mo., on behalf of shareholders who bought stock between Nov. 3, 2003, and April 12, 2004.The complaint, which follows the filing of six similar lawsuits, alleges that NovaStar issued press releases and filed false financial reports with the Securities and Exchange Commission reporting alleged growth. The lawsuit also maintains that NovaStar did not disclose certain compliance issues, and that it artificially inflated its stock price because it was planning two follow-on equity offerings to raise capital. The SEC is conducting an informal inquiry into NovaStar's business practices, but the company has said it is confident that a full review of the facts should put the matter behind it. "All of these copycat complaints are virtually boilerplate -- Scotch-taped and pasted from newspaper articles," said Lanny Davis, outside counsel for NovaStar. "Why they're not embarrassed for filing a lawsuit -- rushing to the courthouse so fast with language that is virtually identical to one another -- is beyond me."