A federal judge this week gave preliminary approval to a $925,000 settlement in a class action lawsuit against Kansas City firm NovaStar Financial.
The lawsuit claimed violations of the Employee Retirement Income Security Act and encompasses a class of people who were participants or beneficiaries of NovaStar’s 401(k) plan over an 18-month period in 2006 and 2007. The suit claims that company leaders violated fiduciary duties in the way they administered the plan. NovaStar did not admit fault as part of the settlement.
U.S. District Judge Nanette K. Laughrey scheduled a fairness hearing on the settlement for April 22, 2010, at 11 a.m. at the federal courthouse in Kansas City. Among the terms of the settlement is a 33 percent share for the plaintiffs’ attorneys.
The firm, once a leader in subprime lending, has faced multiple lawsuits. Late last year the company settled a separate class action lawsuit for $7.25 million over allegations that it released misleading reports and failed to disclose regulatory problems.
The case is Jones v. NovaStar Financial Inc., et al., 4:08-cv-490.