A former Better.com employee is suing the company and its chief executive, Vishal Garg, alleging they provided misleading statements to investors about the digital mortgage firm’s financial prospects and performance.
Sarah Pierce, a former executive vice-president for sales and operations at the SoftBank-backed company, claimed in her lawsuit that Garg misrepresented Better.com’s statements to ensure investors go through with a SPAC merger instead of withdrawing due to its financial condition.
Better.com’s plan to go public through a merger with a special-purpose acquisition company (SPAC) Aurora Acquisition Corp, in a deal that valued it at $7.7 billion, was agreed to last year and has yet to close.
SPAC deals were among the hottest investment trends during the pandemic as early-stage companies looked to go public.AC merger instead of withdrawing due to its financial condition.
In response to the claims, a Better.com lawyer told Reuters that the allegations were “without merit”. At Better.com, Pierce worked as an executive vice-president for sales and operations.
In the lawsuit filed on Tuesday (June 7), Pierce claimed that the company fired her in retaliation for raising concerns about the SPAC deal. In the lawsuit filed with a US district court, southern district of New York, she is seeking financial compensation.
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Garg has also been accused of telling investors and directors that the company would return to profitability in the first quarter of 2022 after the digital mortgage firm lost $304 million last year.
According to Pierce, the operations team and the company’s finance department had informed Garg of internal projections that showed that the company would not be able to break even until at least the second half of this year, The Wall Street Journal report said.
According to the lawsuit, Garg allegedly changed one of the words in the acronym for the accounting phrase, “generally accepted accounting principles” or GAAP with profanity. The lawsuit also said Garg had told other executives at Better.com that interest rates would continue to remain low as US President Joe Biden would contract COVID-19 and die.
In December last year, Garg fired over 900 employees over a Zoom call, a move that faced heavy criticism on social media platforms such as Twitter and LinkedIn. “If you’re on this call, you’re part of the unfortunate group that is being laid off…Your employment here is now terminated,” he told the employees. Also Read: “Approach local police if…” RBI clears stance against unregistered digital lending platforms
Garg stated on the Zoom call that this is the second time he has made such a decision and that he did not want to do so. He said he cried the last time he did so. Also Read: Sensex drops 215 points, Nifty down by 60 in volatile trade post-RBI policy.
Last year, Garg had to apologize for his manner of handling layoffs after a video of him firing 900 employees over a Zoom call went viral on social media.
