Better Home & Finance has filed a lawsuit against its founder and former CEO, Vishal Garg, alleging he violated federal securities laws in an effort to regain control of the company. The legal action follows the board's August 3 vote to remove Garg, citing net losses exceeding $1.5 billion since 2022 and a stock price decline of more than 90 percent during his tenure.
Garg, who previously drew public attention for terminating approximately 900 employees during a single two-minute Zoom call, was ousted by a unanimous vote of all other board members. The lawsuit claims that following his termination, Garg initiated a campaign to overturn the board’s decision by soliciting shareholder support through media statements and social substitute filings.
According to the filing, Garg sent a letter to the board on August 10 demanding the resignation of all members, claiming he represented a group of "concerned shareholders." The company alleges Garg used press releases and social media to falsely state he had secured 52 percent of the shareholder vote without filing the required proxy statements with the Securities and Exchange Commission (SEC). The lawsuit also includes allegations that Garg used derogatory language, such as "monkeys" and "dumb dolphins," to describe employees.
The outcome of the lawsuit will determine the immediate legal rights of the founder and the current board. If the court grants the company's request, Garg would be barred from seeking further shareholder support for at least 30 days, and his existing support tallies could be voided. This would prevent any immediate shift in company control, maintaining the current interim leadership under Daniel Lewis. A person associated with the company would notice the impact through continued management by the board rather than a return to the founder's previous policies and leadership style.
Furthermore, the case centers on the enforcement of SEC proxy disclosure rules, which are designed to ensure shareholders receive accurate information before voting on company matters. The company's claim that Garg bypassed these rules sets a legal precedent regarding how former executives can communicate with shareholders during a takeover attempt. Garg has countered these claims, stating that the interim CEO and the board are the parties who may have committed securities law violations. The court must now determine the validity of these competing claims; the specific dates for future hearings or a trial have not yet been reported.