The former head of failed alternative fund manager Bridging Finance Inc. is seeking to appeal the decisions of Ontario’s Capital Markets Tribunal, which found that he defrauded investors in the firm’s funds.
Last month, the regulatory tribunal ordered former Bridging CEO David Sharpe to disgorge $18 million and pay a $3.6-million penalty after finding that he breached securities rules, engaged in fraud and obstructed the Ontario Securities Commission’s (OSC) investigation into Bridging Finance. The tribunal also banned Sharpe from the securities industry and ordered that he jointly pay another $2 million in disgorgement and $1.2 million in costs along with his wife and Bridging co-founder, Natasha Sharpe, for her role in the misconduct at the firm.
While Natasha Sharpe defended herself in the case brought against her by the OSC, David Sharpe did not participate in the proceedings and indicated that he planned to seek a judicial review of the panel’s findings against him.
On Tuesday, Sharpe announced in a release that he has filed a notice of appeal in the Ontario Divisional Court to challenge the tribunal’s decisions.
“The appeal raises significant legal and constitutional concerns, including abuse of process, breaches of the Charter of Rights and Freedoms and unlawful public disclosure of compelled testimony,” it said.
In the early stages of the regulatory proceedings, Sharpe sought to have the case stayed, alleging abuse of process on the basis that the OSC had improperly disclosed his compelled testimony in court filings. That testimony was disclosed in the OSC’s filings seeking a court-appointed receiver for Bridging Finance after the regulator became concerned about possible misconduct at the firm.
In a 2023 decision, while the panel agreed that the regulator improperly disclosed the compelled testimony by not first seeking an order from the tribunal permitting that disclosure, it declined to stay the enforcement proceedings against them on that basis.
Among other things, the panel concluded that the improper disclosure would not prevent the Sharpes from receiving a fair hearing, and that there was no evidence the regulator acted in bad faith in making the disclosure.
At the time, the Divisional Court declined to hear an appeal from the Sharpes on the improper disclosure issue, ruling that it was premature, given the ongoing regulatory proceedings.
Ontario securities law was subsequently amended to explicitly allow for disclosure of compelled testimony in court filings — and the appeal in this case intends to challenge the constitutionality of that provision.
“The appeal engages every Canadian’s right to protection from abuse of state power. When an agency such as the OSC violates its own statute and no remedy is provided, confidence in the fairness of regulatory justice is undermined,” said Brian Greenspan, Sharpe’s counsel for the appeal, in a release.
The OSC declined to comment on the planned appeal, citing its policy of not commenting on ongoing legal proceedings.