Q1 2004 Novastar Financial Earnings Conference Call - Part 3.

(From Fair Disclosure Wire)

And I think the hiring of Lanny was a very good move on the part of the company. But we can no longer afford to sit back and take an attitude that we don't comment on rumors and speculation. These guys are playing hard ball and they know how to play hard ball and they have a lot of friends to help them play it when they have to play it. And we need to be as aggressive as we can be, legally, to search out illegal shorting of our stock, illegal activity particularly from hedge funds that don't reside in the United States and don't necessarily play by the rules that are required in the United States and don't necessarily come under the jurisdiction of SEC subpoena. SCOTT HARTMAN: Mr. Miller I think you and I can probably agree on this point and I would be happy to talk to you off-line about things that we might be able to do along those lines. LANNY DAVIS, COUNSEL, ORRICK, HERRINGTON & SUTCLIFFE: Scott, this is Lanny Davis may I make one comment. First of all, sir, thank you for the compliment. The true answer to what you've just said is the truth. The answer, there's nothing wrong with short selling. Nobody criticizes. MARTIN MILLER: I'm not saying there's anything wrong with short selling. LANNY DAVIS: It's part of the marketplace and we have no criticism of people who choose to bet on the short side. What we are doing as a company and the reason I am proud to be associated with Mr. Hartman and NovaStar is we are telling the truth and putting the facts out. The press release contains facts; about a performance that is objectively good and even very positive. And those facts will catch up to innuendo that some people use as a surrogate for those facts. Everyone is entitled to their opinion, but we all have to agree on the facts. And what Mr. Hartman and his management team are committed to, is any time there is a misleading, incomplete or inaccurate published report about NovaStar, we intend to try to correct it. MARTIN MILLER: Lenny, I agree with what you said, but I will add one other point. There needs to be some investigation of why in some days we have, I believe, as much as 50% or more of our trading off the New York Stock Exchange than we have on the exchange. I don't believe that that is happening by accident. And it requires some investigation to find out why that is occurring, talking to the specialists on the Exchange. These blocks that are coming one after, even the close tonight there was a stripping of the price right at the close to bring this stock below what the bid and the ask was and I can't tell you how many days I've seen that tape stripped right at 4:00, 4:01, 4:02. Well below what the bid and ask price. That is not happening by accident. And I think it deserves some investigation and some money spent to look at why this stock is being manipulated. SCOTT HARTMAN: Mr. Miller may I wrap up because I also want to give other investors a chance. In conclusion, I think that certainly April 12 changed our view and the third point that I made, we will be more proactive in understanding those types of things. I don't know that we can do anything, but we are planning on being more proactive in understanding those types of activities. MARTIN MILLER: I appreciate you taking my call and Lenny, I would just like to leave you with one point. I am absolutely convinced that Scott Hartman and his crew are a very reputable and honest crew and I think over time we will prove to the world that these guys not only know what they are doing, but tell the truth and thank you for listening to me. SCOTT HARTMAN: Thank you Mr. Miller. OPERATOR: Thank you, sir. Next we move to Mr. William Kinsolving(ph), a private investor. WILLIAM KINSOLVING (ph), PRIVATE INVESTOR: Hello, thank you for taking this call. I would concur with Mr. Miller. In the last conference call which was called under a certain amount of pressure, Mr. Hartman said, I think, quote, we have great faith in the market. I fear I don't share that faith. I contest I am something of an agnostic, if not an atheist. I would like to ask, and Mr. Davis, if would you address this, it is news that's…