From the Friday night dump…

December 27, 2007

friday-night-dump.jpegThis was supposed to be a light week for posting, but I couldn’t let this 8-K filed by NovaStar Financial (NFI) late last Friday go unnoticed. NovaStar, you may recall, was one of the major players in sub-prime mortgages and has seen its stock decline 99.22% this year, so the press release last Wednesday that the company’s Chairman and CEO as well as the CFO were “retiring” and “leaving” respectively kind of seemed like a “dog bites man” story, even though the Chairman and CEO, Scott Hartman, was one of the company’s co-founders. Various news outlets picked up on the retirement meme.

But when the 8K was filed on Friday, the couched language of Wednesday’s press release was replaced by the decidedly more serious “terminated”. The filing noted that both Hartman and CFO Gregory Metz had been terminated, which is clearly different that “retiring” or “leaving”. 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.

Chalk this up to just another example of saying one thing in the press release and another in the filings, which is why reading the actual filings remains so important. This one might have been about a ho-hum management change, but I’d wager a bet that if you went back and looked at NovaStar’s earlier filings and compared them to the corresponding press releases, there would probably be some interesting differences there too.

One final note: I was on Marketplace last night talking about some of the worst footnotes of the year. There’s a link to the show here. Voting on the worst footnote remains open though next Tuesday. If you haven’t cast your ballot yet, you can find it in the sidebar, or if you’re accessing this via RSS or email, you can find a link here.

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