A former senior executive at Better.com, an online mortgage lender, filed a lawsuit on Tuesday alleging that the company misled its investors about its financial prospects ahead of a Special Purpose Acquisition Company merger, The Wall Street Journal reported.
A Special Purpose Acquisition Company is formed to just raise money through an initial public offering to buy another company. It has no commercial operations.
Better.com’s former Executive Vice President for sales and operations Sarah Pierce made the allegations against the company and its Chief Executive Officer Vishal Garg before a United States district court in New York on Tuesday, Reuters reported.
The petition alleged that Garg misrepresented the company’s financial statements to get an advantage in the stalled Special Purpose Acquisition Company merger deal.
The company was supposed to go public through a merger with Special Purpose Acquisition Company Aurora Acquisition Corp in a $7.7 billion (Rs. 54,366 crores) deal last year. The deal, however, is yet to be closed, Reuters reported.
The company lost $304 million (Rs, 2,363 crores) last year, The Wall Street Journal reported. Garg had reportedly told investors the company would be profitable by the first quarter of this year. However, Pierce had informed Garg that the company is likely to break even in the second half of the year at the earliest, according to the lawsuit.
It further alleged that Pierce was removed from her role for raising these concerns in February.
The petitioner demanded financial compensation, Reuters reported.
However, Better.com has refuted the allegations. “We have reviewed the claims in the complaint and strongly believe them to be without merit,” a lawyer for Better.com told Reuters. “The company is confident in our financial and accounting practices, and we will vigorously defend this lawsuit.”
Garg was criticised last year after he laid off over 900 employees over a Zoom call after it went viral on social media, Reuters reported. He had later apologised for his handling of the issue.
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