Key facts
- Better Home & Finance Holding Co. has sued former CEO Vishal Garg in federal court.
- The lawsuit alleges Garg violated Section 13(d) of the Securities Exchange Act of 1934 by forming a shareholder group without timely disclosure.
- Better also claims Garg violated Section 14(a) by issuing misleading communications and soliciting support without a proxy statement.
- The company is seeking court orders to compel an accurate Schedule 13D filing, require corrective disclosures, and void unlawfully obtained shareholder consents.
- Garg had previously claimed to have secured support from shareholders representing a majority of the company's voting power.
Better Home & Finance Holding Co. has initiated a federal lawsuit against its former CEO and founder, Vishal Garg, accusing him of violating U.S. securities laws. The complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Garg engaged in an "illegal, scorched-earth campaign" to regain control of the company.
Better claims Garg violated Section 13(d) of the Securities Exchange Act of 1934 by assembling a group of shareholders to act in concert without timely disclosure of their formation, membership, arrangements, and shareholdings. The company asserts it possesses "incontrovertible evidence" that Garg is not acting alone and has identified individuals such as Steven Sarracino and Activant Capital, Tony Bobulinski, Chris Parker, and Riaz Valani as part of this group.
Furthermore, Better alleges violations of Section 14(a), stating that Garg issued misleading communications, including claims of majority shareholder support, and solicited shareholder backing without first filing a required proxy solicitation statement. Although Garg later filed an amended Schedule 13D on August 17, Better contends this filing is inconsistent with his public claims of majority support, showing the 'group' controlling only 13.7% of shares.
The lawsuit follows Garg's removal as CEO on August 3, with Daniel Lewis appointed interim CEO. Garg had subsequently announced his intention to regain control, claiming majority shareholder support. Better's board has publicly opposed his efforts, citing significant net losses and a substantial stock price decline during Garg's tenure.
Better is seeking declaratory and injunctive relief, asking the court to confirm Garg's violations, order a complete and accurate Schedule 13D filing, mandate corrective disclosures for misleading statements, and prohibit further solicitation until compliant filings are made. The company also requests that any consents or expressions of shareholder support obtained through the alleged unlawful solicitation be voided.