Vishal Garg, the CEO of Better.com who fired 900 employees over Zoom just before Christmas, has been sued by a former executive for allegedly misleading investors.
A mortgage company backed by SoftBank agreed to a $7.7 billion merger with a blank-check firm to take the company public just over a year ago, but the so-called SPAC deal has yet to close. Since then, controversy surrounding founder Vikram Garg and surging mortgage rates have hurt the company’s image and business. A former executive vice president for sales and operations at the company claimed in a lawsuit that Garg misrepresented Better.com’s statements to ensure the SPAC merger moved forward.
Garg was concerned that backers of Better.com might pull out of the merger after discovering its dramatic economic circumstances, Pierce claimed. She is pursuing both Garg and Better.com on allegations of disseminating false information about whether the firm’s digital mortgage businesses are profitable.
On Tuesday, Better.com lawyer Lawrence Levy said the claims were “without merit.” SoftBank did not immediately reply to a request for comment. In the lawsuit, Pierce claimed that she had raised concerns about the deal and was pushed out of her role in February in retaliation for speaking up. She is seeking financial compensation. She also claimed that Garg made several miscalculations about the looming interest rate environment, pushing Pierce to hire hundreds more staff. Garg allegedly said mortgage rates would fall and sales would grow because “President Biden will die of Covid.”
We have reviewed the complaint and bearings them on the company to be unsubstantiated. Better.com is confident in its financial and accounting practices, and we will vigorously defend against this lawsuit.
The infamous Zoom layoff call
Better.com, a mortgage and insurance company that assists customers in purchasing these services, became a profitable business and a major success story for SoftBank during the United States housing boom in 2021. Sales surged almost tenfold that year. The company ranked No. 1 on LinkedIn’s Top Startups list in 2021 and 2020. But public sentiment about the company turned at the end of last year when a video of Garg firing staff over Zoom went viral. This controversial layoff announcement, issued days before Christmas, made Garg the subject of dozens of national news stories. He became the poster child for unscrupulous corporate conduct during the work-from-home era.
If You’re listening to this conversation, you’re part of the unlucky category that are being laid off, Garg said on the phone call, laying off 9 workers from the company. Your employment in this area is terminated, effective immediately.
In March 2019, Better CEO Dan Garg was accused of firing employees who were not productive and only worked two hours a day. Garg promised an email from HR after announcing the layoffs — but one former employee told CNN Business he immediately lost access to his company computer, phone, email and messaging, including Slack channels. Garg took a one-month leave of absence returning in January. He used his leave to “reflect on his leadership, reconnect with the values that make Better great and work closely with an executive coach,” the company told employees in a memo upon his return. An outside law firm reviewed Better’s workplace culture, and the company added more managers and a chief human resources officer. Garg apologized to staff in January, saying he was “deeply sorry for the angst, distraction and embarrassment my actions have caused.”
In January 2019, Better.com announced its authorities who had been on the board of directors left the company. The company indicated that while “we do not comment on individuals’ decisions to resign from the board,” Raj and Dinesh did not resign from Better.com as a result of any issue that they disagreed with.
