Better.com and its chief executive Vishal Garg, who infamously fired 900 employees on a Zoom call, are facing a whistleblower complaint that he misled investors.
Sarah Pierce, former executive vice president for Sales and Operations at the online mortgage lender, said she was pushed out of her role after raising issues with the statements Garg made to investors in his "zeal to close" a SPAC deal. The SoftBank-backed company planned to go public through a SPAC transaction that valued the firm near $8 billion as of May 2021.
That deal is still yet to close, as Better.com has been hurt by rising interest rates and engulfed in controversy, in no small part due to the actions of its chief executive.
Garg took a one-month leave from his role late last year amid global backlash for firing employees by videoconference. Pierce, in a complaint filed Tuesday in federal court in New York, said she warned Garg that his layoff plan violated California's Warn Act and confronted him for lying about the terminated employees stealing from the company.
“We have reviewed the claims in the complaint and strongly believe them to be without merit,” Better.com said in a statement to the Wall Street Journal, which was first to report the lawsuit. “The company is confident in our financial and accounting practices, and we will vigorously defend this lawsuit.”
Better.com grew quickly during the early months of the pandemic, as low interest rates and a hot housing market boosted demand both for new mortgages and for refinancing existing loans. But the firm lost over $300 million in 2021, according to filings from Aurora Acquisition Corp., the SPAC that agreed to merge with Better last year.
The lawsuit says Garg told investors that Better.com could achieve profitability in the first quarter of this year, despite internal projections that saw the back half of the year as the best-case scenario. Garg allegedly said he believed interest rates would fall because "President Biden will die of covid," according to the lawsuit.
Pierce said she was pushed out of her role in February in retaliation for pushing back against Garg. She has also filed a retaliation complaint with the Occupational Safety and Health Administration, according to the lawsuit.