Key Takeaways
- • The OSC sought a receiver for Bridging Finance Inc. on April 30 (2021), and the move was made public the following Saturday, freezing investments for roughly 26,000 investors, most of them retail.
- • Bridging had amassed $2 billion in assets under management by the time of its receivership, sold through Sprott Asset Management and major Canadian banks and brokerages.
- • Allegations include hundreds of millions of dollars in struggling loans never revalued, which boosted management fees, and about $19.5 million of fund money flowing into CEO David Sharpe's personal account.
- • PricewaterhouseCoopers, the receiver, is trying to sell the company, and investors are expected to lose between $800 million and $1 billion, according to people familiar with the sale process.
- • The OSC has not yet brought a case against any individual, but the collapse has highlighted weak oversight of privately managed alternative investments.
Summary
The Globe and Mail's investigation examines how Bridging Finance Inc., a private debt manager led by David Sharpe and his wife Natasha Sharpe, built a reputation for steady returns before being placed under receivership. A relative's 2019 inquiry prompted Alejandro Cardot, a Montreal-based former consultant, to examine the firm's claims of 8 per cent annual returns with no down months or losses. Cardot found that some borrowers were public or in bankruptcy and had disclosed their lenders, which made the claims harder to reconcile. He filed a whistle-blower complaint with the Ontario Securities Commission on Feb. 12, 2021, alleging "Bridging Finance's returns are not real." The OSC had already been investigating since February 2020.
On April 30, the regulator asked an Ontario judge to appoint a receiver, and the move was announced the next morning. Bridging's retail investors saw their portfolios frozen indefinitely. According to the primary report, court filings and the Globe's reporting allege that hundreds of millions of dollars of troubled loans were not revalued, which boosted management fees. Nearly half the loan portfolio reportedly deferred cash interest. The OSC and PwC allege about $19.5 million of Bridging funds reached Mr. Sharpe's personal account, some of it transferred to Liechtenstein, along with payments for home renovations, Tesla and Bentley leases.
Bridging had partnered with Sprott Asset Management, which marketed its funds to advisers and banks. Bridging was founded in 2012 with backing from Jenny Coco of Coco Group, and Natasha Sharpe, a risk executive with prior roles at BMO and Sun Life, served as chief investment officer. David Sharpe, a former compliance executive, joined as chief operating officer. Mr. Sharpe's lawyer said he disagrees with the OSC's allegations and will respond through legal channels. Ms. Sharpe declined to comment.
PwC is trying to salvage the loan book and sell the firm, but the largest loan is reportedly worth a fraction of its book value. The affair has raised questions about oversight of privately managed alternative assets, where investors rely directly on managers. The Globe's central question is why few on Bay Street challenged the Sharpes' claims earlier.
On April 30, the regulator asked an Ontario judge to appoint a receiver, and the move was announced the next morning. Bridging's retail investors saw their portfolios frozen indefinitely. According to the primary report, court filings and the Globe's reporting allege that hundreds of millions of dollars of troubled loans were not revalued, which boosted management fees. Nearly half the loan portfolio reportedly deferred cash interest. The OSC and PwC allege about $19.5 million of Bridging funds reached Mr. Sharpe's personal account, some of it transferred to Liechtenstein, along with payments for home renovations, Tesla and Bentley leases.
Bridging had partnered with Sprott Asset Management, which marketed its funds to advisers and banks. Bridging was founded in 2012 with backing from Jenny Coco of Coco Group, and Natasha Sharpe, a risk executive with prior roles at BMO and Sun Life, served as chief investment officer. David Sharpe, a former compliance executive, joined as chief operating officer. Mr. Sharpe's lawyer said he disagrees with the OSC's allegations and will respond through legal channels. Ms. Sharpe declined to comment.
PwC is trying to salvage the loan book and sell the firm, but the largest loan is reportedly worth a fraction of its book value. The affair has raised questions about oversight of privately managed alternative assets, where investors rely directly on managers. The Globe's central question is why few on Bay Street challenged the Sharpes' claims earlier.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.