Decision in brief: Bridging Finance Inc, Enforcement Proceeding, Merits, October 28, 2024

In this enforcement proceeding, the OSC says that Bridging Finance Inc. and three of its senior employees – David Sharpe, its chief executive officer; Natasha Sharpe, its chief investment officer; and Andrew Mushore, its chief compliance officer – either carried out or participated in three frauds.

Bridging set up and managed investment funds, which were meant to earn money by making loans to private borrowers. The OSC says that three sets of loans made from two of these funds involved fraud, and that the respondents did not properly respond to conflicts of interest that the loans presented. The OSC also says that the respondents interfered with its investigation.

The Tribunal decided that David, Natasha and Mushore either carried out or participated in one or more frauds.

David carried out the first fraud, in which Natasha participated, through loans to companies controlled by Sean McCoshen. Almost $20 million of the money loaned was paid to David and Natasha as kickbacks.

David and Natasha carried out the second fraud, in which Mushore participated, through a loan to Bridging, disguised as a loan to companies controlled by Rishi Gautam. Bridging owned half of Ninepoint Partners, the entity that managed one of its funds, and it needed the money to buy the other half of Ninepoint from another entity with which Bridging had been co-managing the fund.

Natasha carried out the third fraud, in which David participated, through loans to companies controlled by Gary Ng. The purpose of the loans was disguised. Ng used the loans to buy half of Bridging’s outstanding shares, including shares from Natasha, and to pay $1 million to the Sharpes.

The Tribunal decided that the OSC did not prove that Bridging should be responsible for David’s and Natasha’s frauds.

The Tribunal decided that the conflict of interest requirements that the OSC relied on apply only to registered firms – such as Bridging – and not to the Sharpes and Mushore. A conflict of interest happens where the interests of a registered firm are different than the interests of the firm’s client. Bridging failed to properly respond to the conflict of interest raised by the loans funding the Ninepoint transaction. David and Natasha were responsible for Bridging’s actions. With respect to the other two sets of loans, the OSC did not prove that Bridging should be responsible for the Sharpes’ conduct.

Lastly, the Tribunal decided that the respondents interfered with the OSC’s investigation:

• David and Natasha gave misleading answers to OSC investigators during the investigation;
• Bridging gave misleading information to the OSC, for which David and Natasha are responsible;
• Mushore participated in Bridging providing misleading information to the OSC;
• David tried to intimidate former Bridging employees who were co-operating with the court-appointed receiver over Bridging’s assets; and
• Natasha let David listen to her examination by the OSC’s investigators, which she was not allowed to do.

As a result of this decision, the Tribunal will hold a hearing to decide what sanctions and costs should be ordered against the respondents because of their conduct.