The AI mortgage lender is seeking court orders to void shareholder consents and end Garg's boardroom campaign
Better Home & Finance Holding Company filed a federal lawsuit Tuesday against Vishal Garg, the company's founder and ousted chief executive. The complaint accuses Garg of violating US securities laws as part of a campaign to unseat the company's board and return to the leadership role he held since the AI lender's founding.
The complaint, filed in the US District Court for the Southern District of New York, alleges Garg breached Sections 13(d) and 14(a) of the Securities Exchange Act of 1934.
According to Better, Garg secretly assembled a coalition of shareholders to support his reinstatement without making the disclosures required by the Securities and Exchange Commission.
The company further alleges he solicited shareholder backing through a series of misleading communications, including a claim that he already secured 52% of the company's voting power, without first filing a definitive consent solicitation statement as mandated by federal securities law.
A boardroom dispute goes federal
The lawsuit's central argument is that those claims were false. Garg's own amended Schedule 13D filing with the SEC acknowledged that the written consents he gathered fell short of the threshold required to remove a majority of directors.
Better's board had called on Garg to abandon what it described as a costly and distracting boardroom power struggle before resorting to litigation.
The board voted unanimously on August 3 to remove Garg as chief executive — every director except Garg participated in that vote. The company cited GAAP net losses exceeding $1.5 billion since 2022 and a stock price decline of more than 90% as the basis for his removal.
Following his exit, the company named board member Daniel Lewis as interim CEO, with a mandate that includes approximately $45 million in cost reductions and a pivot toward a distribution model built around independent mortgage brokers and enterprise partners.
What's at stake for brokers
Through the lawsuit, Better seeks court orders compelling Garg to file an accurate Schedule 13D that discloses the full composition, arrangements, and purpose of his shareholder group, correct materially false and misleading statements, halt further solicitation, and void all consents gathered during what the company calls an unlawful campaign.
The company said Garg's actions "serve to benefit only Mr. Garg" and called them "an affront to shareholder democracy."
The outcome carries direct relevance for mortgage brokers evaluating Better as a platform partner. The AI lender, known for pioneering 47-second mortgage approvals through its Tinman AI platform in partnership with OpenAI, operates in all 50 states and has funded more than $110 billion in loans since its founding.
Garg has retained attorney Alex Spiro of Quinn Emanuel Urquhart & Sullivan LLP.
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