Topline
Better Home & Finance on Tuesday sued founder Vishal Garg, accusing him of a “scorched-earth campaign” to regain control of the company in a lawsuit that highlights his controversial tenure as chief executive, during which employees allege Garg called them “monkeys” and “dumb dolphins.”
Better Home & Finance accused its founder of running an illegal scheme to regain control of the firm.
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Key Facts
Better Home, in a complaint filed Tuesday in the U.S. Southern District of New York, alleges Garg violated two federal securities laws by “cultivating a coalition of shareholders” and “flooding the market with misleading statements” to reinstall himself as CEO.
The company’s board voted unanimously—excluding Garg—to remove him as CEO on Aug. 3, citing net losses exceeding $1.5 billion since 2022 and a more than 90% plunge in Better Home’s stock price under his tenure, according to the complaint.
After being ousted, Garg launched a “campaign of retribution” against the company and, in a letter sent to Better Home’s board on Aug. 10, requested the immediate resignation of all board members, separately claiming he assembled a “group of concerned shareholders” to help reestablish Garg as CEO, Better Home alleges.
Garg allegedly solicited shareholder support through press releases, text messages, social media posts and in an interview with Bloomberg, during which Better Home alleges Garg falsely claimed he “already corralled 52%” of the shareholder vote—all without filing any required proxy statements with the Securities and Exchange Commission.
Better Home asked the court to void all shareholder approval Garg collected and to prevent Garg from requesting shareholder support for at least 30 days.
surprising fact
In Better Home’s announcement of Garg’s departure as CEO, Garg said in a statement that “now is the right time for new leadership” at the firm, adding he was “confident” Daniel Lewis is the “right person to lead the company through this important time in its evolution.” He separately wrote on X that he was “[looking] forward to what the new CEO can do.” Garg’s tone toward Lewis shifted, and on Aug. 15, Garg claimed on X: “The only people who may have committed securities law violations are Daniel Lewis and the board.”
key background
Garg founded Better Homes in 2016, and the mortgage lender processed more than $110 billion in loans before going public through a SPAC merger in 2023. The firm, backed by SoftBank and Goldman Sachs, was marred by employees who pointed to Garg’s reputation for being a brash leader. Garg called his staff “dumb dolphins” in an email, and in 2021, he fired 900 employees on a Zoom call before later calling them “lazy.” In the complaint, employees allege Garg referred to his staff as “mortgage monkeys.” An internal review prompted by Garg’s behavior found he “failed to set a tone at the top that supported a strong culture of internal controls,” noting the firm had become “less effective than others in our industry at capturing potential customers.” Garg, who was placed on leave after the mass layoff over Zoom, was reinstalled as CEO in 2022.