June 7 (Reuters) - A former Better.com employee is suing the company and its chief executive, Vishal Garg, alleging they provided misleading statements to investors about the digital mortgage firm's financial prospects and performance.

Sarah Pierce, a former executive vice-president for sales and operations at the SoftBank-backed company, claimed in her lawsuit that Garg misrepresented Better.com's statements to ensure investors go through with a SPAC merger instead of withdrawing due to its financial condition.

A Better.com lawyer said the claims were "without merit".

SoftBank did not immediately reply to a Reuters request for comment.

Better.com's plan to go public through a merger with a special-purpose acquisition company (SPAC) Aurora Acquisition Corp, in a deal that valued it at $7.7 billion, was agreed to last year and has yet to close.

SPAC deals were among the hottest investment trends during the pandemic as early-stage companies looked to go public.

Pierce said in the lawsuit - filed on Tuesday in a U.S. district court, southern district of New York - that she was pushed out of her role in February in retaliation for raising concerns about the deal. She is seeking financial compensation.

"We have reviewed the claims in the complaint and strongly believe them to be without merit," a lawyer for Better.com said in an emailed statement to Reuters. "The company is confident in our financial and accounting practices, and we will vigorously defend this lawsuit," the lawyer added.

Founded in 2016 and headquartered in New York, Better.com offers mortgage and insurance products to homeowners through its online platform.

Last year, Garg had to apologize for his manner of handling layoffs after a video of him firing 900 employees over a Zoom call went viral on social media. (Reporting by Sneha Bhowmik in Bengaluru; Additional reporting by Mrinmay Dey; Editing by Sherry Jacob-Phillips and Himani Sarkar)