SEC Ends Investigation Into Better.com Amid Ongoing Financial Struggles Ahead Of Planned SPAC Vote

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Investigation Concludes Without Recommendation for Enforcement

The U.S. Securities and Exchange Commission (SEC) announced on August 3 that it does not intend to recommend an enforcement action against digital mortgage lender Better.com. This decision comes after a thorough investigation by the SEC into potential violations of federal securities laws.

Background of the Investigation

In July, the SEC began investigating whether Better.com had violated federal securities laws. As part of this inquiry, regulators requested documents from both the company and its SPAC partner Aurora Acquisition Corp. regarding their business activities. The SEC’s investigation centered on allegations made by Sarah Pierce, former executive vice president of customer experience, sales, and operations at Better.com. Pierce claimed that the company had misrepresented the health of its business in order to proceed with a merger deal.

Key Findings of the Investigation

While the SEC did not find any evidence of intentional wrongdoing by Better.com, it is essential to note that the decision does not imply exoneration or guarantee that no further action will be taken. The investigation highlighted several concerns regarding the company’s business practices and its handling of layoffs.

Timeline of Events

May 2021: Better.com begins planning to go public via a $6 billion SPAC.
July 2022: The SEC starts investigating whether Better.com had violated federal securities laws.
August 3, 2023: The SEC announces that it does not intend to recommend an enforcement action against Better.com.

Conclusion

The conclusion of the SEC investigation without any recommendation for enforcement is a significant development for Better.com. However, this decision does not preclude future actions by regulatory agencies or potential legal repercussions for the company.

What’s Next for Better.com?

Despite the SEC’s decision, Better.com still faces several challenges. The long-awaited vote on its SPAC deal is scheduled for August 11, and it must complete the merger by September 30 to avoid ceasing operations. The company has struggled with cash flow issues and layoffs in recent months.

Better.com: A Company in Turmoil

The past year has been tumultuous for Better.com, marked by botched layoffs, changing market conditions, and a surge in mortgage interest rates affecting parts of its business. These challenges have significantly impacted the company’s financial performance, with a net loss of $89.9 million in Q1 2023 and the layoff of about 91% of its workforce over an approximately 18-month period.

Additional Developments

In June, Better.com announced it was exiting the real estate business and shifting from an in-house agent model to a partnership agent model.
The company continues to face cash flow issues despite narrowing its loss compared to the same period last year.

Conclusion

About the Author

Mary Ann Azevedo has more than 20 years of business reporting and editing experience for publications such as FinLedger, Crunchbase News, Crain, and The Wall Street Journal. She covers fintech, startups, and innovation in various sectors.