Better settles with former exec who filed whistleblower suit

Former operations head Sarah Pierce, who had accused Better CEO Vishal Garg of providing misleading information to investors in leadup to SPAC, faced $2.76 million judgment in countersuit.

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Digital mortgage lender Better has settled a whistleblower lawsuit filed by former executive Sarah Pierce against the company and its founder and CEO, Vishal Garg, not long after Pierce was ordered to repay more than $2 million in loans the company had provided so she could exercise stock options.

Court documents show that Pierce has satisfied the $2.76 million judgment Better won against her in January in a separate lawsuit. But neither Better nor Pierce will say if she actually repaid the debt, or if Better forgave some or all of it in exchange for Pierce dropping her own lawsuit.

Pierce sued Better in June 2022, four months after being terminated in retaliation, she alleged, for complaining directly to Garg and other top executives about what she characterized as misleading financial statements and information provided to investors as the company pursued plans to go public.

In addition to violating securities laws intended to protect shareholders and investors, Pierce accused Better of violating federal and state Worker Adjustment and Retraining Notification (WARN) Act requirements when Garg fired more than 900 employees on a Zoom call weeks before Christmas 2021.

Sarah P 1709 square purple2

Sarah Pierce

“Pierce was concerned with both CEO Garg’s defamation of these employees and his knowingly blatant fabrications about the [reduction in force] process and the company’s prospects for profitability,” attorneys for Pierce said in a Dec. 9, 2022, amended complaint. “In the days following the Zoom call, Pierce directed her leadership to stick to truthful company-approved talking points and requested that the company issue a statement correcting CEO Garg’s misinformation on the terminated employees.”

In addition to denying Pierce’s allegations and demanding a jury trial, Better filed its own lawsuit against Pierce, seeking repayment of two loans totaling $2.277 million plus interest and attorneys fees.

In responding to Pierce’s complaint, attorneys for Better acknowledged that after starting out at Better in 2016 as a salesperson, Pierce “received several promotions,” culminating in her appointment as head of operations in August 2020. “Defendants further admit that while plaintiff was employed at Better, the company grew from 50 employees to over 9,000 employees and from less than $1 million in revenue to over $1 billion in revenue.”

But Better denied allegations that Garg misled investors about the company’s finances as it tried to go public by closing a “SPAC” merger with Aurora Acquisition Corp., a special purpose acquisition company.

Vishal Garg

Vishal Garg

Garg took a leave of absence from the company after the Zoom call went viral, and the Securities and Exchange Commission launched an investigation into issues including related-party transactions and allegations made by Pierce.

A whistleblower complaint Pierce filed with the Occupational Safety and Health Administration (OSHA) was dismissed in August 2022.

The SEC informed Better in August 2023 that “it had concluded the investigation and did not intend to recommend an enforcement action against Aurora or Better,” a spokesperson for the company told Inman. Better closed its SPAC merger the same month, netting $565 million in funding.

In the meantime, Pierce’s suit against Better — and Better’s countersuit — dragged on, with attorneys for both parties making dozens of filings.

On Jan. 5, 2024, Better won a judgment against Pierce for $2.277 million in unpaid principal and $483,052 in interest — more than $2.76 million — plus attorney’s fees. The judgment gave Pierce the option of returning 220,500 unvested Better shares valued at $1.1 million to satisfy part of the judgment.

Attorneys for Pierce filed notice in February that they would appeal the judgment in Better v. Pierce.

Meanwhile, in Pierce’s suit against Better, attorneys for both parties were bickering about discovery issues as recently as April 5.

But on April 19, attorneys for Better notified the court that Pierce had satisfied the judgment against her in Better v Pierce, and that Pierce was dropping her appeal of the judgment against her.

On the same day, attorneys for Better and Pierce notified the court that the parties had agreed to a “voluntary dismissal with prejudice” of Pierce’s lawsuit against Better — meaning the case would be permanently dismissed, and cannot be retried.

Better did not specify how Pierce satisfied the $2.76 million judgment against her in Better v. Pierce, and Pierce agreed to drop her suit against Better the same day.

Which raises the question: Did Better agree to let Pierce off the hook for paying the judgment, in exchange for dropping her own suit against Better?

“We can’t comment on the litigation settlement, which is confidential,” a Better spokesperson said when asked if that’s what happened.

Pierce and her attorneys did not respond to a request for comment.

Better Home & Finance Holding Company, as it’s known since the SPAC merger, reported a $543 million 2023 net loss in March. With shares in Better changing hands for about 40 cents this week, the company’s market capitalization is just under $300 million.

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