The Ontario Securities Commission (OSC) has launched an enforcement action against KPMG LLP, alleging significant audit failures in its 2019 and 2020 reviews of four funds managed by Bridging Finance Inc. This move comes as the fallout from Bridging’s collapse continues to reverberate, with investor losses now estimated at $1.3 billion.
The OSC claims KPMG failed to conduct adequate audit procedures on the valuation of loans held within the funds, a critical component of their financial statements. Despite issuing reports asserting that the funds’ financial positions were fairly presented under Canadian generally accepted auditing standards, the regulator contends these representations were false. Just one month after KPMG’s last auditor report in March 2021, Bridging Finance and its assets were placed into receivership by the Ontario Superior Court of Justice on April 30, 2021.
Bridging Finance, once a prominent player in Canada’s alternative finance sector, managed over $2.09 billion in assets for more than 26,000 investors, many of whom were retail clients and pensioners drawn by promises of high returns. Founded in 2012, the firm specialized in short-term, high-interest loans to small and mid-sized businesses deemed too risky for traditional banks. However, its operations unraveled amid allegations of mismanagement, leading to an OSC investigation in early 2021.
The Ontario Capital Markets Tribunal, an independent arm of the OSC, recently ruled that Bridging’s former CEO David Sharpe and his wife Natasha Sharpe, who held executive roles, committed fraud by diverting investor funds for personal benefits and accepting undisclosed kickbacks from borrowers. The Tribunal also found that Andrew Mushore, the firm’s former Chief Compliance Officer, indirectly participated in the scheme. A sanctions hearing for the trio is set for December 6, 2026, with potential penalties including fines and bans from capital markets.
PricewaterhouseCoopers LLP (PwC), appointed as receiver in April 2021, has been managing Bridging’s remaining assets. Their findings point to unchecked loans to high-risk borrowers, often with lenient terms or non-cash repayments like equity or accrued interest, as key drivers of the massive losses.
KPMG’s alleged oversight failures add another layer of scrutiny to a case that has already exposed deep flaws in Canada’s private debt sector. A case management hearing for the OSC’s enforcement action against KPMG is scheduled for May 5, 2026, before the Capital Markets Tribunal. The outcome could reshape expectations for auditor accountability in Ontario’s capital markets.
Investor losses of $1.3 billion stand as a stark reminder of the stakes involved, with over two-thirds of Bridging’s managed assets wiped out in the collapse.
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