Better Opens Investigation Into Allegations Against Vishal Garg as Board Fight Escalates

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Better Home & Finance Holding Company has opened an investigation into allegations that founder, director and former CEO Vishal Garg sought to offer company interests or property to former employees who are shareholders in exchange for support in his campaign to remove five directors.

The allegations were announced Wednesday night by a special committee of Better’s board, which said they were brought to the company by independent counsel for a former employee. The committee described the allegations as serious and said that, if substantiated, they could raise questions about Garg’s fiduciary duties as a director.

The company has not announced a finding that Garg committed misconduct. Its statement describes an investigation into allegations, not a completed inquiry or adjudication. WRE News had not located a public response from Garg to the newly announced investigation as of publication.

The development is the latest escalation in an increasingly bitter fight over control of the publicly traded mortgage company. Earlier Wednesday, Better’s special committee also challenged Garg’s claim that shareholders representing more than 46% of the company’s voting power had submitted written consents supporting his effort to remove five directors.

Garg’s group disclosed the 46% figure in proxy materials filed with the Securities and Exchange Commission. The filing itself cautioned that the reported support was not a final result verified by an independent inspector and could change through revocations before consents are formally delivered.

Better responded that Garg had not obtained support “from anywhere near” the level he claimed, based on what the committee said was its visibility into custodial banks, brokers and previously submitted consents. That assertion also has not been independently adjudicated. The two sides are effectively presenting competing accounts of the shareholder support behind Garg’s consent campaign.

New allegations deepen an already contentious board fight

In its Wednesday night announcement, Better’s special committee alleged that Garg had sought to exchange company interests and property for shareholder consents. The committee said the alleged conduct had already affected the company’s ability to maximize the value of certain assets and claims, but it did not identify the assets, the former employee involved or the specific terms allegedly discussed.

Those omissions matter. At this stage, the company has publicly disclosed an allegation and an internal investigation; it has not released evidence establishing that an exchange occurred.

The committee urged shareholders to return the company’s white consent revocation card and disregard Garg’s green consent card. That recommendation is part of Better’s opposition to the consent solicitation and should be understood in the context of the ongoing control fight.

Garg’s campaign seeks to remove directors Daniel Lewis, Harit Talwar, Arnaud Massenet, Bhaskar Menon and Prabhu Narasimhan. His group has set an Oct. 2 target date for shareholders to submit written consents, according to recent SEC-filed solicitation materials.

The dispute dates to Garg’s departure from the CEO role in August. WRE News reported Aug. 3 that Garg had stepped down as chief executive. Less than two weeks later, WRE reported Better’s pushback against his effort to reconstitute the board.

Better then sued Garg in federal court. An SEC-filed Schedule 13D amendment describes the company’s complaint as alleging violations of federal disclosure and proxy-solicitation rules. The same filing states that Garg’s side considers those allegations meritless and intends to defend against them.

The SEC filing also documents an earlier failed effort to deliver consents believed to represent a majority of Better’s voting power. According to the filing, the parties later learned those consents did not constitute a majority because of what the filing described as an administrative error involving the number of outstanding shares.

What remains unresolved

Two questions now sit at the center of the dispute. The first is whether Garg’s current consent solicitation actually has the shareholder support his group claims. The second is whether the conduct described by Better’s special committee occurred and, if so, whether it breached duties Garg owes the company as a director.

Neither question was resolved Wednesday.

The next meaningful evidence could come through additional SEC filings, the consent-delivery process, court proceedings or findings from Better’s newly announced investigation. Until then, the 46% figure remains a claim by Garg’s group, Better’s challenge to that figure remains the company’s competing position, and the allegations that triggered the investigation remain allegations.