Sec Form 4 Filing - Jefferies Capital Partners LLC @ NOVASTAR FINANCIAL INC - 2011-10-06

FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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1. Name and Address of Reporting Person Jefferies Capital Partners LLC 2. Issuer Name and Ticker or Trading Symbol NOVASTAR FINANCIAL INC [ NOVS] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) _____ Director X __ 10% Owner _____ Officer (give title below) _____ Other (specify below) (Last) (First) (Middle) 520 MADISON AVENUE, 10TH FLOOR, 3. Date of Earliest Transaction (MM/DD/YY) 10/06/2011 (Street) NEW YORK, NY10022 4. If Amendment, Date Original Filed (MM/DD/YY) 6. Individual or Joint/Group Filing (Check Applicable Line) _____ Form filed by One Reporting Person __ X __ Form filed by More than One Reporting Person (City) (State) (Zip)

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned 1.Title of Security (Instr. 3) 2. Transaction Date (MM/DD/YY) 2A. Deemed Execution Date, if any (MM/DD/YY) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock ( 1 ) 10/06/2011 J( 2 ) 16,132,891 D $ 0 0 ( 2 ) I See footnote (1) Common Stock ( 1 ) 10/06/2011 J( 2 ) 589,978 D $ 0 0 ( 2 ) I See footnote (1) Common Stock ( 1 ) 10/06/2011 J( 2 ) 622,433 A $ 0 2,480,564 ( 2 ) ( 5 ) I See footnotes (1), (2) and (5) Common Stock ( 1 ) 10/06/2011 J( 2 ) 622,433 D $ 0 1,858,131 ( 2 ) ( 5 ) I See footnotes (1), (2) and (5) Common Stock ( 1 ) 10/06/2011 J( 3 ) 192,874 A $ 0 2,329,145 ( 3 ) ( 5 ) I See footnotes (1), (3) and (5) Common Stock ( 1 ) 10/06/2011 J( 4 ) 64,859 A $ 0 1,992,990 ( 4 ) ( 5 ) I See footnote (1), (4) and (5)

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned ( e.g. , puts, calls, warrants, options, convertible securities) 1. Title of Derivative Security (Instr. 3) 2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (MM/DD/YY) 3A. Deemed Execution Date, if any (MM/DD/YY) 4. Transaction Code (Instr. 8) 5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5) 6. Date Exercisable and Expiration Date (MM/DD/YY) 7. Title and Amount of Underlying Securities (Instr. 3 and 4) 8. Price of Derivative Security (Instr. 5) 9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4) 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4) 11. Nature of Indirect Beneficial Ownership (Instr. 4) Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares

Reporting Owners Reporting Owner Name / Address Relationships Director 10% Owner Officer Other Jefferies Capital Partners LLC 520 MADISON AVENUE, 10TH FLOOR NEW YORK, NY10022 X JEFFERIES CAPITAL PARTNERS IV LP 520 MADISON AVENUE 12TH FLOOR NEW YORK, NY10022 X Jefferies Employee Partners IV LLC 520 MADISON AVENUE 12TH FLOOR NEW YORK, NY10022 X JCP PARTNERS IV LLC 520 MADISON AVE 12TH FL NEW YORK, NY10022 X LUIKART JAMES L 520 MADISON AVENUE, 12TH FLOOR NEW YORK, NY10022 X FRIEDMAN BRIAN P 520 MADISON AVE 12TH FLOOR NEW YORK, NY10022 X JCP IV LLC 520 MADISON AVENUE NEW YORK, NY10022 X Signatures /s/ James L. Luikart 10/10/2011 Signature of Reporting Person Date

Explanation of Responses:

( 1 )(1) See Exhibit 99.1 - Footnote (1) ( 2 )(2) See Exhibit 99.1 - Footnote (2) ( 3 )(3) See Exhibit 99.1 - Footnote (3) ( 4 )(4) See Exhibit 99.1 - Footnote (4) ( 5 )(5) See Exhibit 99.1 - Footnote (5)

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).

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