(Bloomberg) – Canada’s leading financial markets regulator is investigating the officers and shareholders of Bridging Finance Inc., one of the largest providers of private small business credit in the country, into allegations of embezzlement investors.
An Ontario court has appointed PricewaterhouseCoopers to handle Bridging’s affairs at the request of the Ontario Securities Commission, pending the outcome of the investigation. The move was made public on Saturday.
Bridging, based in Toronto, was run by a team of husband and wife, David Sharpe and Natasha Sharpe. In court documents, the OSC alleges that under their direction, the company embezzled approximately C $ 35 million ($ 28.5 million) “to complete an acquisition for its own benefit” – a transaction with Ninepoint Partners LP for a participation in an income fund.
The regulator also alleged that Bridging officials mismanaged funds by failing to disclose conflicts of interest, violated “many securities laws and regulators” – including by deceptive investigators – and failed to disclose conflicts of interest. not acted in the best interests of stakeholders.
Among the alleged conflicts, the OSC alleges that David Sharpe received C $ 19.5 million in undisclosed payments to his personal checking account from a company controlled by Sean McCoshen, during the same period that Bridging funds were loaned over C $ 100 million to other McCoshen companies.
“The seriousness of these regulatory violations raises serious concerns about the ability of senior management to operate in Ontario’s capital markets in accordance with securities law,” the OSC said in court documents . Bridging investors “can no longer count on BFI or its senior management to protect their interests.”
“Investors deserve a thorough investigation into the business activities of BFI and the Sharpes and to know that their investment funds are in the hands of honest, competent and responsible custodians,” added the regulator.
The OSC also issued an interim order halting trading in the Bridging Finance funds and suspended the registration of David Sharpe as the firm’s “most valuable person”.
David Sharpe did not respond to a request for comment on Saturday.
Bridging Finance, which has approximately $ 1.8 billion in assets under management, lends to small and medium-sized businesses involved in everything from milling flour to delivering groceries.
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