You would think that with its stock in the toilet, lawsuits alleging securities fraud pending, and a history of SEC inquiries, Novastar Financial (NYSE: NFI) would find it wise to start being honest with investors.

You would think. But on December 20, I wrote about the departure of Novastar's CEO, CFO, and general counsel. In the press release dated December 19 announcing their "retirements," Novastar wrote that Chairman and CEO Scott Hartman would "leave the Company and retire from its Board of Directors."

In the 8-K announcing the moves, filed with the SEC on the 21, Novastar said that "On December 18, 2007, Scott Hartman was terminated as the Chief Executive . . . On December 18, 2007, Gregory Metz was terminated as the Chief Financial Officer of the Company, effective as of January 3, 2008."

Why did Novastar change its language so dramatically? "Leaving the company" became "terminated" in a wonderful case of differential disclosure: 'Let's put out a broadly disseminated PR saying one thing and then file an 8-K with the SEC a few days before a holiday saying something completely different and hope no one will notice'.

Given that Novastar has already handed its shareholders massive losses, the least they could do is be honest and forthcoming in their press releases. But apparently, that's too much to ask.