Commercial Litigation and Arbitration

Class Counsel — Indictment Not Preclusive

In certifying the securities class acation against NovaStar Financial and its directors and officers on Thursday, Judge Ortrie D. Smith of the Western District of Missouri rejected defense contentions that the indictment of Milberg Weiss rendered it unsuitable as class counsel. "The attorneys listed in the indictment are not involved in this case and have, in fact, taken a leave of absence from the firm. Entwistle & Cappucci LLP, the co-lead counsel involved in this case assures all parties against any behavior of the type alleged in the indictment. Further, removal of Milberg Weiss as co-lead counsel would not only harm the class, but prematurely punish the firm for unproven allegations. The Court does not believe it is be appropriate to consider disqualification of the firm unless and until the claims have been substantiated." In Re NovaStar Fin. Sec. Litig., 2007 U.S. Dist. LEXIS 9039 (W.D. Mo. Feb. 8, 2007).

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