Aurora Acquisition Corp., the special purpose acquisition company planning to make public the digital nonbank lender Better.com, said on Thursday that the Securities and Exchange Commission (SEC) ended an investigation of the companies with no enforcement action.
In July 2022, HousingWire reported that the SEC launched an inquiry into Aurora and Better to evaluate allegations of federal securities law violations, prompted by a former top executive’s lawsuit.
“On August 3, 2023, SEC staff informed Aurora and Better that they have concluded the investigation and that they do not intend to recommend an enforcement action against Aurora or Better,” Aurora’s SEC filing states.
The lawsuit was filed by Sarah Pierce, former executive vice president for customer experience, sales and operations at Better.com.
Pierce claimed the company and its CEO, Vishal Garg, violated securities and labor laws as the lender began working toward its public offering. Pierce alleges Garg told the board of directors that the firm would report a profit by the end of Q1 2022, despite Pierce and other senior leaders explicitly saying it was impossible.
The lawsuit is in the discovery phase, per court filings.
Aurora and Better disclosed that the SEC’s enforcement division requested documents in the second quarter of 2022 regarding Better’s business and operations and Garg’s other business activities. The company said it collaborated with the SEC.
Aurora’s shareholders will decide the merger’s fate next week, on August 11, about two years after the deal was announced and ahead of the extended deadline to complete the merger deal on September 30.
If Aurora is unable to complete the merger with Better by September 30, or any other business combination, it will cease all operations.
Better has faced an arduous journey to its IPO, marked by surging mortgage rates and declining origination production. In the first quarter of 2023, the digital lender posted a net loss of $89.9 million, per Aurora’s filings.
To navigate a challenging mortgage market, Better imposed massive layoffs, receiving bad press for the manner in which it handled the layoffs. The digital lender had about 950 team members as of June 8 — a 91% drop from its peak of approximately 10,400 employees in Q4 2021, SEC filings show.
Better’s most recent business change was to shift its real estate strategy. The company will partner with outside agents as referral partners, pivoting from its in-house licensed professionals. Ultimately, Better laid off the agents in its real estate brokerage subsidiary, Better Real Estate LLC.
Better ranked as the 59th largest mortgage lender in the country in the first quarter, per Inside Mortgage Finance.