News CEO Vishal Garg, who laid off 900 employees at Zoom just before Christmas, has been sued by the former CEO for allegedly misleading investors.
The SoftBank-backed online mortgage company agreed to a $7.7 billion merger with a blank check firm to take the company public more than a year ago, but the so-called SPAC deal isn’t over yet. Since then, Garg’s public controversy — and rising mortgage rates — have tarnished the company’s image and business.
In her lawsuit, Sarah Pierce, the company’s former executive vice president of sales and operations. Alleges Garg misrepresented Better.com’s statements to ensure the SPAC merger proceeded.
Pierce said that Garg fears investors will pull out of the merger because of Better.com’s deteriorating financial health. He sued Garg and Better.com for misrepresenting a digital mortgage company’s economic prospects and performance to investors.
A news attorney said the claims were “baseless.” SoftBank (SFTBF) did not immediately respond to a request for comment.
In the lawsuit filed Tuesday in US District Court, Pierce said he was removed from his role in February retaliation for his concerns about the deal. He demanded financial compensation.
He also alleged that Garg made several miscalculations about upcoming interest rates, prompting Pierce to hire hundreds more. For example, Garg reportedly said that mortgage rates would fall and sales would increase because “President Biden will die of Covid.”
“The company has strong faith in our financial and accounting practices, and we will defend that statement vigorously.”
The infamous call to fire Zoom
During the American real estate boom, Better.com became a profitable business and a severe success story for SoftBank. Sales will increase almost tenfold by 2021. The company, which helps clients get mortgages and insurance, is #1 on LinkedIn’s list of Best Startups of 2021 and 2020.
However, public sentiment towards the company changed late last year. When a video of Garg firing employees at Zoom went viral in December. The controversial sacking announcement, released days before Christmas, made Garg the subject of dozens of national news stories. In addition, he became the child on the poster for the company’s evil behavior while working from home.