OSC Investigating Toronto-Based Bridging Finance Over Misappropriated Funds
A major investment management firm based in Toronto has entered into a court-approved receivership after the Ontario Securities Commission began an investigation over the alleged misappropriation of investor funds.
Bridging Finance Inc. is now being undertaken by PricewaterhouseCoopers as per the request of the OSC, as it awaits the outcome of an investigation regarding the company’s financial dealings. Bridging, which is based in Toronto, is run by David and Natasha Sharpe, and manages approximately $2 billion in assets as of December. The investment management firm predominantly lends to small and medium-sized businesses that stem from a variety of industries.
According to court documents obtained by Bloomberg, the OSC alleges that the firm, along with its senior management, misappropriated funds and did not fully disclose conflicts of interest. The regulator’s investigation is primarily focused on a number of transactions that occurred between 2017 and 2020, among which CEO David Sharpe received $19.5 million in undisclosed payments into his checking account from an individual that had received over $100 million in loans from Bridging.
In addition, a sworn affidavit by OSC forensic accountant Daniel Tourangeau alleges that a significant portion of the undisclosed funds were transferred into David Sharpe’s investment accounts at Richardson GMP and the Bank of Montreal, with at least $1.4 million later being transferred to offshore accounts. Approximately $128,000 was paid to Tesla Inc, and nearly $100,000 to a vehicle-leasing company which was supposedly used to lease a 2018 Bentley Bentayaga and a 2013 Bentley GTC Mulliner.
Among other things, the OSC accuses Bridging of misappropriating nearly $35 million as part of an agreement with investment manager Ninepoint Partners LP that was centered around an income fund the two companies were operating together. A Ninepoint executive revealed to the OSC that Bridging had allocated $20 million from the joint income fund to help pay for a loan, and then reverted the transaction. The funds were returned from a variety of other Bridging accounts, but not from a law firm trust account, which ultimately raised concern.
When Ninepoint interrogated Bridging about the transactions in question, Bridging was unable to come up with a satisfactory answer, to which Ninepoint threatened to proceed with litigation. In response, Bridging offered to buy out Ninepoint— a move which the OSC says was completed via embezzled money through a series of convoluted transactions. “The gravity of these regulatory breaches raises serious concerns about the ability of senior management to operate in Ontario’s capital markets in compliance with securities law,” said the OSC in its court documents.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
