Judge Tosses Shareholder Suit Against Novastar

Law360, New York (June 9, 2008, 12:00 AM EDT) -- Struggling Novastar Financial Inc. has won dismissal of a securities fraud suit brought by a group of shareholders who accused the former subprime lender of failing to plan for the mortgage meltdown last year.

The news came as a rare boost for the troubled company, which is under scrutiny by federal authorities and is on the brink of bankruptcy after losing more than $733 million in 2007.

Judge Ortrie Smith of the U.S. District Court for the Western District of Missouri dismissed the case Wednesday, ruling...
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