Post by ginger on Jul 11, 2006 3:26:16 GMT -4
Novastar Holders Sue Broker-Dealers, Charge Manipulation
WASHINGTON -(Dow Jones)- Lehman Brothers Holdings Inc. (LEH) said it is a defendant in a lawsuit filed by 40 Novastar Financial Inc. (NFI) shareholders who accuse the company of illegal stock manipulation.
The financial services company said in its second-quarter report filed with the Securities and Exchange Commission that Novastar shareholders allege that Lehman, along with 10 other companies, accepted orders for purchases, sales and short sales of Novastar stock with no intention of covering the orders with borrowed stock or stock issued by the company.
The other defendants weren't named in the filing.
Shareholders claim that the scheme caused distortions in the amount of active trading in Novastar stock and forced the share price to decline.
Lehman, of New York, said Novastar shareholders are seeking unspecified damages.
Novastar shares have traded in a range of $24.08 to $42.55 in the last year. The company's shares closed at $33.01 on Monday, up 59 cents.
The lawsuit was filed in the Superior Court of California for San Francisco County in June, the filing said.
As previously reported, Lehman was named as a defendant in a separate lawsuit, filed in April, alleging that it, along with 10 other companies, violated antitrust laws and conspired to earn illicit fees through naked short selling.
Naked short selling exists when a stock is sold before an arrangement has been put in place to borrow the shares. It is illegal for most investors, but legal for firms that make markets in stocks and bring liquidity to the market.
Also in the filing, Lehman said it repurchased 11.2 million shares of its stock at $73.25 a share in the quarter ended May 31, down from the split-adjusted 11.4 million shares it purchased at $67.23 in the first quarter.
-By Jared A. Favole, Dow Jones Newswires; 202-862-9207; jared.favole@dowjones.com
WASHINGTON -(Dow Jones)- Lehman Brothers Holdings Inc. (LEH) said it is a defendant in a lawsuit filed by 40 Novastar Financial Inc. (NFI) shareholders who accuse the company of illegal stock manipulation.
The financial services company said in its second-quarter report filed with the Securities and Exchange Commission that Novastar shareholders allege that Lehman, along with 10 other companies, accepted orders for purchases, sales and short sales of Novastar stock with no intention of covering the orders with borrowed stock or stock issued by the company.
The other defendants weren't named in the filing.
Shareholders claim that the scheme caused distortions in the amount of active trading in Novastar stock and forced the share price to decline.
Lehman, of New York, said Novastar shareholders are seeking unspecified damages.
Novastar shares have traded in a range of $24.08 to $42.55 in the last year. The company's shares closed at $33.01 on Monday, up 59 cents.
The lawsuit was filed in the Superior Court of California for San Francisco County in June, the filing said.
As previously reported, Lehman was named as a defendant in a separate lawsuit, filed in April, alleging that it, along with 10 other companies, violated antitrust laws and conspired to earn illicit fees through naked short selling.
Naked short selling exists when a stock is sold before an arrangement has been put in place to borrow the shares. It is illegal for most investors, but legal for firms that make markets in stocks and bring liquidity to the market.
Also in the filing, Lehman said it repurchased 11.2 million shares of its stock at $73.25 a share in the quarter ended May 31, down from the split-adjusted 11.4 million shares it purchased at $67.23 in the first quarter.
-By Jared A. Favole, Dow Jones Newswires; 202-862-9207; jared.favole@dowjones.com