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An initial hearing over former Bridging Finance Inc. (BFI) CEO David Sharpe’s court application alleging Ontario Securities Commission (OSC) enforcement staff violated securities law ended without much progress, but may provide insight on the tussle to come.

Earlier this month, Sharpe filed an application alleging OSC enforcement staff violated securities law by disclosing portions of his compelled testimony during an investigation in court filings. Sharpe was seeking to have certain evidence thrown out and an investigation order quashed, among other relief.

BFI was appointed a receiver in May amid an ongoing OSC investigation into whether the company and certain executives made misstatements to the regulator’s staff and failed to deal fairly with clients. The OSC has yet to make any formal allegations against BFI.

An OSC panel held its first hearing on Sharpe’s application on Thursday. While the hearing largely focused on procedural issues, Carlo Rossi, senior litigation counsel with the OSC, indicated the regulator intends to forcefully oppose Sharpe’s application.

In a virtual hearing, Rossi strongly rejected any suggestion that OSC enforcement staff failed to comply with their obligations in the use of material uncovered during an investigation into BFI.

Sharpe argued in his application that disclosing portions of his compelled testimony in court filings has undermined the integrity of the OSC investigation, harmed Sharpe’s reputation and undermined public confidence in the OSC’s investigative process.

In Thursday’s hearing, Rossi maintained the securities commission is empowered to compel evidence, to use that evidence and to seek the appointment of a receiver for BFI. He also noted it’s not unusual for the OSC to file compelled material in court applications.

Those filings led to the Ontario Superior Court of Justice appointing PricewaterhouseCoopers Inc. (PwC) receiver of BFI and its investment funds based on the OSC investigation’s preliminary findings, which uncovered evidence of questionable transactions involving BFI funds and possible conflicts of interest.

Alistair Crawley of Crawley MacKewn Brush LLP, who is counsel for Sharpe, said Thursday that he and his client would like to have the case heard as soon as possible. Discussions at the hearing suggested it would be at least five weeks until the case could be heard before an OSC tribunal.

Rossi indicated that OSC staff may bring motions to have some or all of the arguments from Sharpe’s forthcoming filings struck, depending on the contents of those filings. The OSC may also raise jurisdictional issues, such as whether the application should be heard in court, rather than by an OSC tribunal.

The hearing also revealed that Chubb Insurance will seek intervener status in the case. Whether that move will be opposed by Sharpe or the OSC is not year clear.

PwC’s counsel also appeared at the hearing, indicating that PwC is “concerned” with the relief being sought by Sharpe, which could potentially compromise PwC’s ability to investigate the BFI funds and recover assets for investors.

To date, PwC has been unable to provide a reliable net asset value for the BFI funds or to give a full accounting of their assets.

Thursday’s hearing concluded without any order from the panel. Counsel for Sharpe and the OSC agreed to discuss scheduling over the next several days before any future proceeding is set.