Better Home & Finance Sues Former CEO Vishal Garg Over Alleged Securities Law Violations

Key Points

• Better Home & Finance Holding Company filed a federal lawsuit against former CEO and founder Vishal Garg in the U.S. District Court for the Southern District of New York.
• Better alleges Garg coordinated with an undisclosed shareholder group to replace board members and regain the CEO role, in violation of Sections 13(d) and 14(a) of the Securities Exchange Act.
• The suit follows a leadership transition in which Better’s board voted on August 3, 2026 to remove Garg, citing more than $1.5 billion in cumulative net losses since 2022 and a stock decline of over 90% during his tenure.
• Better alleges Garg falsely claimed support from more than 52% of the company’s voting power; Garg has not formally responded to the complaint, though an amended SEC filing acknowledged his August 17 written consents fell short of a majority.
• Better is asking the court to compel corrective disclosures, halt the alleged consent solicitation, and invalidate any shareholder consents obtained through it. These remain unproven allegations, and a court has not determined whether Garg violated any law.

Better Home & Finance (Nasdaq: BETR) has escalated its dispute with founder and former CEO Vishal Garg by filing a lawsuit that challenges his effort to regain control of the AI-powered mortgage lender. Better alleges Garg made misleading claims about shareholder support and failed to disclose coordinated action with other shareholders, describing his campaign in its own public statements as an “illegal, scorched-earth campaign” to retake the company.

Background: A Leadership Transition That Reversed Course

Better’s independent directors and Garg initially reached an agreement for his departure as CEO. The company’s board voted unanimously on August 3, 2026 to remove Garg and appointed board member Daniel Lewis, a hedge fund manager who had joined the board roughly a week earlier, as interim CEO. In its public statements, Better attributed the leadership change to the company’s financial performance under Garg, citing cumulative net losses exceeding $1.5 billion since 2022 and a stock price decline of more than 90% over his tenure.

Better says Garg initially accepted the board’s decision before reversing his position. Garg has since disputed that characterization publicly, telling reporters he felt “hoodwinked” by Lewis, whom he says used praise for the company’s strategy to gain board access before pushing for his removal. Garg retained attorney Alex Spiro and, on August 13, announced he had secured signed declarations from shareholders he said represented a majority of the company’s voting power, alongside a proposed $30 million stock buyback and an independent search for a permanent CEO.

Undisclosed Shareholder Group and Voting Claims

The lawsuit claims Garg assembled a group of shareholders to support replacing board members and reinstating him as CEO, without properly disclosing the group’s formation, members, ownership stakes, or plans, as Section 13(d) of the Exchange Act can require when investors act together. Better also alleges Garg described himself as acting alone in a recent securities filing despite evidence the company says shows coordination with other shareholders.

Separately, Better disputes Garg’s claim that he secured support from more than 52% of the company’s voting power, characterizing that claim as false or misleading. The company alleges Garg sought shareholder consents without filing the definitive consent-solicitation materials required under Section 14(a), and is seeking an injunction to halt further solicitation activity until the required disclosures are made. Better additionally wants the court to find that any consents, authorizations, or expressions of support already obtained through the alleged solicitation are invalid and without legal effect.

Relief Sought and Better’s Response

Better is seeking declaratory and injunctive relief. Specifically, the company is asking the court to require Garg to file a complete, accurate Schedule 13D that identifies the alleged shareholder group, outlines its purpose, and details its ownership and plans. Better also seeks corrective disclosures for what it describes as materially false or misleading statements, arguing these steps are necessary so investors receive accurate and timely information before making decisions about company leadership and board composition.

Separately from the litigation, Better said it plans to file a consent-revocation statement with the SEC, along with a white consent-revocation card, intended to counter the written-consent solicitation the company says Garg and the alleged shareholder group are pursuing.

Where Things Stand

These claims have not been proven in court. Garg has not filed a formal response to the complaint itself, though in an amended SEC filing he acknowledged that consents delivered on August 17 did not represent a majority of Better’s voting power, undercutting his earlier public claim of majority support. Garg has separately characterized Better’s broader conduct toward him, including the circumstances of his removal, as a betrayal by Lewis rather than a legitimate governance outcome, though that framing predates and is distinct from his response to this specific lawsuit.

Investor Takeaway

For BETR shareholders, the dispute creates uncertainty around corporate governance, board stability, executive leadership, and strategic execution. The case itself is not an operating or financial update, but a prolonged battle could divert management attention and create additional legal costs at a company already navigating steep prior losses and a diminished market value. Shareholders do not need to take action at this time, according to the company.

Investors may want to monitor several developments going forward: any formal response Garg files with the court, a ruling on Better’s request for injunctive relief, additional SEC filings from either side clarifying the actual scope of shareholder support, potential changes to the board, and the broader impact of the dispute on Better’s business operations and capital-market strategy.