Is Anyone Not Investigating Novastar?

Naked shorting poster child Novastar Financial is heading south, and fast. The company reported yesterday that it was under multiple investigations from the SEC, the FBI, the Federal Trade Commission, the U.S. Department of Housing and Urban Development, the U.S. Department of Justice, the New York attorney general and the U.S. Department of Labor.

It might have been shorter to list the agencies not investigating Novastar.

Lest we forget, this subprime lender was aggressively pushed by stock tout Phil Saunders, who runs the "Sanitycheck" website under the pseudonym "Bob O'Brien," and tries to palm himself off as a "market reform" advocate. Saunders set up a website, nfi-info.net, to pimp this stock and attack its critics.

Novastar was also touted by Overstock.com CEO Patrick Byrne, whose own SEC-probed company is sinking fast under a tide of red ink.

© 2008 Gary Weiss. All rights reserved.