The U.S. Securities and Exchange Commission (SEC) said it does not intend to recommend an enforcement action against digital mortgage lender Better.com. The pronouncement comes after an investigation on the part of the SEC to determine if violations of federal securities laws had occurred.
Last July, the SEC began looking into whether Better.com had violated federal securities laws, requesting documents from both the company and SPAC partner Aurora Acquisition Corp. about their business activities.
Regulators sought information about the business activities of CEO and co-founder Vishal Garg and allegations made by Sarah Pierce, former executive vice president of customer experience, sales and operations, who claimed that Better.com had misrepresented the health of its business in order to move forward with a SPAC.
In an August 3 statement, the SEC also noted that while it does not recommend an enforcement action, the decision “must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation.”
Meanwhile, the long-awaited vote for Better.com to go public is scheduled for August 11 ahead of the extended deadline to complete the merger deal on September 30. The company originally began making plans to go public via a $6 billion SPAC in May 2021. Things took a dramatic turn for the worse later that year, and the SPAC was delayed.
In late July, Aurora said in an SEC filing that shareholders would be asked to vote on a proposal that if the SPAC did take place, with Aurora surviving the merger, that Aurora would change its name to “Better Home & Finance Holding Company,”
It added: “If Aurora is unable to complete the merger with Better.com by the extended deadline of September 30 and is not able to complete another business combination by the specified date, Aurora will cease all operations within 10 business days except for the purpose of winding up.”
Last year, Better.com declared that it intended to move forward with its planned public debut, despite lackluster performance of blank-check combinations in previous quarters. Better.com itself had seen its fair share of turbulence since it announced its plans to merge with a SPAC, including multiple botched layoffs (more on those here and here) and changing market conditions that impacted parts of its business, including a surge in mortgage interest rates.
A company spokesperson told TechCrunch Friday that Better.com is still in a quiet period given the SPAC so it “cannot comment publicly.”
More recently, in June, Better.com announced it was exiting the real estate business.
The embattled fintech startup laid off its real estate team on June 7, shifting from an in-house agent model to a partnership agent model. It also continues to bleed cash.
According to HousingWire, other Aurora filings from July showed that Better.com had posted a net loss of $89.9 million in Q1 2023 and had slashed about 91% of its workforce over an approximately 18-month period. Specifically, as reported by HousingWire, the company had about 950 employees as of June 8 compared with a peak of about 10,400 employees in the fourth quarter of 2021. While Better.com seems to have narrowed its loss compared to a net loss of $327.7 million in the first quarter of 2022, it’s clearly still struggling.
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