Vishal Garg, the chief executive officer of Better.com who drew flak for firing 900 employees over a Zoom call, has been sued by a former employee for allegedly misleading investors.
In a lawsuit, Sarah Pierce, former executive vice-president for sales and operations at Better.com, alleged that Garg misrepresented the company's statements to keep investors on board with the planned merger with a special-purpose acquisition company (SPAC) instead of withdrawing due to its financial condition.
The digital mortgage firm’s merger with the SPAC Aurora Acquisition Corp was agreed to last year, but is yet to be closed.
Pierce claimed that she was pushed out of her role in February after she raised concerns about the deal. She said as an employee, she had pushed Better.com to issue a statement correcting Garg’s “misinformation" on terminated employees.
She claimed to have personally confronted Garg saying she “would not enable his false narrative." Pierce is seeking financial compensation from the company and has also approached the Occupational Safety and Health Administration with a complaint alleging retaliation under the Sarbanes-Oxley Act.
A Better.com lawyer said in a statement that Pierce’s claims were "without merit."
“The company is confident in our financial and accounting practices, and we will vigorously defend this lawsuit,” The Wall Street Journal quoted the lawyer as saying.
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 a 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.
