Novastar on the firing line

Michelle Leder makes a good point at footnoted.org about the disclosure disconnect at mortgage lender Novastar (NFI). The company issued a press release last week announcing that CEO Scott Hartman and finance chief Gregory Metz “will leave the company.” But two days later, in its SEC filing on the subject, Novastar said the two had been “terminated.”

The shift prompts Leder to wonder, “Why would NovaStar not just state the facts the first time around? I mean it’s not as if anyone would be surprised that a company might want to fire the folks who were running the show when the stock dropped through the floor.”

And indeed, disclosure shortfalls are far from the biggest problem at Novastar. The company’s business has collapsed along with the implosion of the subprime mortgage market. Novastar recently posted a third-quarter loss of $64.05 a share, which helps to explain why it has seen its shares drop to $3 and change recently from a reverse split-adjusted $107 apiece at this time last year.

As for the difference between leaving and being terminated, no one answered the phone Friday at Novastar. But note the last line of boilerplate in recent Novastar press releases: “This press release speaks only as of its date and we expressly disclaim any duty to update the information herein.” It seems like that’s not the only duty Novastar’s flacks are disclaiming.