Key facts
- Better's special committee is investigating founder Vishal Garg for allegedly offering company assets to former employees for support in ousting directors.
- A securities class-action lawsuit alleges Better, founder Vishal Garg and CFO Loveen Advani misled investors about loan production outlook.
- The lawsuit claims Better failed to disclose a slowdown in its loan conversion funnel tied to macroeconomic factors.
- Better's stock price fell 28.5% on May 7 after the company issued updated guidance implying a 45% miss on its $1 billion monthly loan volume target.
- Vishal Garg was removed as CEO in early August amid an ongoing leadership shakeup.
- Better sued Garg on Aug. 18 for alleged unlawful solicitation and securities disclosure violations.
Better Home & Finance is facing a federal securities class-action lawsuit alleging that the company, its founder Vishal Garg, and CFO Loveen Advani misled investors about the company's loan production outlook and its sensitivity to macroeconomic conditions. The suit, filed by shareholder Richard Gastwirt, claims Better failed to disclose that its loan conversion funnel was slowing due to macroeconomic pressures, making its previously stated $1 billion monthly funded loan target unattainable.
During a March 13 earnings call, then-CEO Garg had told investors the company was on track to reach $1 billion in monthly volume by May 2026. Advani also stated that Better generated opportunities independent of broader market conditions and could grow regardless of macro factors. However, the lawsuit alleges these statements were materially false and/or misleading.
Investors allegedly learned of these issues on May 7, when Better issued updated guidance for the second quarter implying roughly $550 million per month in originations, a significant miss from the prior target. The company's stock price fell 28.5% on May 7 following the announcement. This legal action comes as Better's special committee is also investigating Garg for allegedly offering company assets to former employees for their support in removing directors.
Garg was removed as CEO in early August, and Better subsequently sued him on August 18 for alleged unlawful solicitation and securities disclosure violations. A federal judge previously declined to halt Garg's campaign to replace board members.