In yet another unfortunate turn for the troubled online mortgage lender Better.com, the U.S. Securities and Exchange Commission (SEC) is investigating the company for allegedly violating securities law.
SEC investigates Better.com
The SEC has launched an investigation into Better.com over potentially violating securities law, according to information revealed in an SEC filing.
Better.com agreed to merge with a special purpose acquisition company (SPAC) called Aurora Acquisition Corp. (AURC) in a deal that would take the digital mortgage firm public through the back door. However, the SEC is requesting business and operational documents from both Better.com and Aurora.
Former head of sales and operations at Better.com, Sarah Pierce, sued the company over allegedly misleading investors during the early parts of its ongoing attempt to go public. The lawsuit also states Better.com retaliated against her for speaking out against Garg.
For clarity, Garg laid off about 900 employees in Dec. 2021 over a company-wide Zoom meeting, another 3,100 a few months later, and more than 1,000 more after that. All the while, Garg has remained central to the controversy due to concerns over his arguably toxic governance.
Pierce’s lawsuit has yet to reach an outcome and Better.com vehemently denies all claims against them.
Regarding the probe, a Better.com spokesperson told reporters, “We believe it's a routine request for information, not an inquiry.” They can believe what they want—but with an IPO supposedly en route, Better.com has a lot more to lose.
Is the proposed Better.com IPO dust in the wind?
Garg is an unpredictable executive. He wrote an erratic and offensive email to employees in 2020 that read, “You are TOO DAMN SLOW. You are a bunch of DUMB DOLPHINS and…DUMB DOLPHINS get caught in nets and eaten by sharks. SO STOP IT. STOP IT. STOP IT RIGHT NOW. YOU ARE EMBARRASSING ME.”
Still, all the discoveries against Garg have not been enough to get him to step down nor be removed. As Better.com continues to fight for the progress of its blank-check merger IPO,, the SEC investigation throws a serious wrench. After all, it’s up to the commission to approve public offerings.
Aurora Acquisition first went public as a blank-check firm in Apr. 2021. SPACs typically have two years to merge with a company for the purpose of taking it public. If the merger does not occur within that time frame, the SPAC stock must dissolve. Aurora and Better.com have agreed to merge, but have not officially done so. The two parties have about nine months left to complete the merger.
While that may seem like enough time, an ongoing SEC investigation and bearish market conditions could easily mean they don’t make the cut.
AURC stock is trading at $9.82 per share as of mid-afternoon on Friday, July 15.