NovaStar is absolutely not in a very good shape right now. The company is now facing its second lawsuit by an investor alleging that certain company executives made false and misleading public statements about the company’s financial status.
Gary Tanner, the investor who filed the case, is represented by Kenneth Nelson of the Kansas City-based Nelson Law Firm PC. Tanner filed the case on Monday in U.S. District Court for the Western District of Missouri.
The suit contains allegations similar to those contained in a lawsuit filed on Friday by investor Robert Boyd III. Both lawsuits seek class-action status, making it eligible to anyone who bought NovaStar stocks between May 4, 2006, and Tuesday.
Tanner’s and Boyd’s suits allege that certain NovaStar executives issued false and misleading statements regarding the company’s business and financial results. The defendants falsely portrayed the company as being healthy. As a result, NovaStar stock traded at artificially inflated prices during the Class Period, reaching a high $37.59 per share in May 2006.
The company’s status has tumbled since February 20 when it reported a loss of 39 cents a share for the quarter that ended December 31. The company executives also said that they expect little if any taxable income from 2007 through 2011 as its older securitizations mature.