Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—S.D.N.Y.: AI-native mortgage and home finance platform failed to show irreparable harm, (Aug 31, 2026)

By R. Jason Howard, J.D.

The total mix of publicly available information adequately informs shareholders as to the defendant’s intentions.

The Southern District of New York has denied a motion for a temporary restraining order and preliminary injunction brought by Better Home & Finance Holding Co., against its founder and former CEO after determining that binding Second Circuit precedent foreclosed a finding of irreparable harm, “perhaps the single most important prerequisite for the issuance of a preliminary injunction,” for which the movant “must demonstrate an injury that is neither remote or speculative, but actual and imminent” (Better Home & Finance Holding Co., v. Garg, No. 1:26-cv-07025-CM (S.D.N.Y. Aug. 28, 2026)).

Better Home. Better Home & Finance Holding Company is a publicly traded AI-native mortgage and home finance platform. The defendant is the founder of Better Home, sits on its Board, and served as its CEO until August 2026 when all of Better Home’s Board members except the defendant voted to remove him as CEO and appoint an interim CEO.

Better Home asserted that the defendant “immediately launched a campaign of retribution against the Company and its Board, organizing shareholders in an effort to remove the directors responsible for his termination.” The defendant’s version is that he was ousted against the will of the majority of shareholders, as part of a ‘coup’ and his actions since then “reflect an attempt to restore the shareholders’ will and act in the best interests of the Company as its founder and one of its largest shareholders.”

Actions following removal. After removal, the defendant, through counsel, delivered letters to the Board containing a table of concerned shareholders, a demand for restoration as CEO advising that the defendant was holding signed declarations from shareholders representing a majority vote of company shareholders, and written consents from him and six other shareholders seeking the resignation of five Board members. The defendant also participated in a Bloomberg interview asserting that 52 percent of the voters have spoken out against the removal.

On August 17, the defendant filed his amended Schedule 13D and a preliminary consent proxy statement on Schedule 14A, “the latter of which represented that the defendant's counsel had delivered to Better Home declarations of over 50 percent of shareholders supporting him.” The next day, Better Home filed suit seeking emergency injunctive relief. A few hours later, the defendant filed an amended Schedule 13D and an amended Schedule 14A, which among other things, sought to correct previous representations that the defendant held majority support, explaining that those calculations were based on Better Home’s own calculations. Better Home then amended its complaint to account for the amended schedules.

The amended complaint alleged: (1) violations of the reporting requirements of Section 13(d) of the Exchange Act based on the defendant’s alleged formation and nondisclosure of a “group;” (2) violations of Section 14(a) of the Exchange Act and its implementing regulation based on the defendant’s alleged solicitation of stockholder proxies and consents without filing a compliant proxy solicitation statement; and (3) violations of Section 14(a) and its implementing regulation based on the defendant’s allegedly materially false and misleading statements and omissions in his proxy solicitation statements.

The next day the defendant opposed the renewed request for emergency injunctive relief, arguing that Better Home had not sufficiently alleged the requisite irreparable harm and, in support, submitted declarations from seven shareholders swearing that they have knowledge of the complaint filed against the defendant, the allegations against the defendant, and that “their intent to support the defendant’s proposals remains unchanged despite the allegations of misrepresentation.” On August 27, 2026, the defendant’s revised preliminary proxy statement became definitive by operation of law, and the defendant filed it with the SEC the same day.

Irreparable harm. In order to obtain a preliminary injunction, Better Home needed to establish that (1) it is likely to succeed on the merits of its claim; (2) it is likely to suffer irreparable harm absent preliminary relief; (3) the balance of equities tips in its favor; and (4) an injunction is in the public interest.

The Southern District focused on whether Better Home demonstrated irreparable harm and explained that binding Second Circuit precedent foreclosed a finding of irreparable harm under the present facts.

It was the contention of Better Home that the defendant’s Schedule 13(d) stripped shareholders of their right to make an informed decision about whether to support the defendant’s proposals and that the defendant’s alleged failure to file a Schedule 14A proxy solicitation statement prior to certain communications has already polluted the shareholder decision-making process, although the defendant asserted he will not rely on any consents signed or obtained prior to his present Schedule 14A solicitation is issued—and that the updated Schedule 14A remains inaccurate.

The Southern District stated that, in essence, the plaintiff’s theory of irreparable harm boils down to its asserted fear that the defendant “will secure a majority of shareholder votes from uninformed or misinformed shareholders and take over the Company under false pretenses.”

The Southern District, however, concluded that the total mix of publicly available information adequately informs shareholders about a dispute as to whether any alleged “group” exists, and the defendant’s intentions. The Court stated that it was satisfied that the shareholders are equipped to make an informed vote in response to the defendant’s solicitations and the anticipated counter-solicitation by Better Home.

Conclusion. Better Home failed to carry its burden to establish irreparable harm on the facts before the Court and accordingly, its motion for a temporary restraining order and a preliminary injunction was denied.

The case is No. 1:26-cv-07025-CM.

Judge: Garnett, M.

Attorneys: Edward B. Diskant (McDermott Will & Schulte) for Better Home & Finance Holding Co. Alex Spiro (Quinn Emanuel Urquhart & Sullivan, LLP) for Vishal Garg.

Companies: Better Home & Finance Holding Co.

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