The Ontario Securities Commission (OSC) has been granted permission by the Capital Markets Tribunal to share evidence from its investigation into alleged regulatory misconduct at Bridging Finance Inc. with criminal investigators in response to a subpoena issued by the Ontario Superior Court of Justice.
The tribunal issued an order authorizing the OSC to disclose transcripts of its compelled examinations of the three former Bridging executives at the heart of the regulator’s enforcement proceeding — the failed fund manager’s former CEO, David Sharpe, its founder and former chief investment officer, Natasha Sharpe, and its chief compliance officer, Andrew Mushore.
That case resulted in a finding that they engaged in a series of frauds involving the firm’s investment funds, among other regulatory misconduct. As a result, they were ordered to pay $27.6 million in monetary sanctions — including $5.6 million in penalties, almost $21 million in disgorgement and over $1 million in costs. The Sharpes were also hit with permanent market bans, while the tribunal panel imposed a 10-year ban on Mushore.
The regulator’s disclosure of the contents of its compelled interviews of the Sharpes became an issue before the OSC’s enforcement case was heard.
In 2022, the tribunal ruled that the OSC improperly disclosed compelled testimony in court filings seeking a receiver for the fund manager and its funds when it neglected to get an order authorizing the disclosure.
However, the tribunal rejected the Sharpes’ request to stay the OSC’s proceedings against them based on the improper disclosure. And, in May, the Ontario Divisional Court also rejected an appeal of the tribunal’s findings and sanctions that again raised the issue of the improper disclosure, among other things.
On Wedensday, the tribunal said that following a confidential written hearing, it granted an application by the OSC for an order authorizing it to disclose both its transcripts of the compelled interviews, and the exhibits that it used in those interviews, in response to a criminal subpoena that was issued on May 11 by Justice Sugunasiri of the Ontario Superior Court of Justice.
To date, there haven’t been any allegations of criminal wrongdoing made against any of the individuals involved in the downfall of Bridging — an event that’s expected to result in losses of over $1 billion for investors in the firm’s funds.
At the same time, the tribunal — which didn’t immediately issue its reasons for the disclosure decision — also ordered that the records of its proceeding are to be kept confidential, and not released to the public.