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Credit fund’s collapse leads to $1 billion lawsuit against EY

by AIP Online Bureau | Jul 9, 2025 | Eco/Invest/Demography, International News | 0 comments

In a claim filed with Ontario’s Superior Court last month, PricewaterhouseCoopers alleged that EY issued unqualified opinions on Bridging’s books from 2014 to 2020 despite red flags, including inflated asset values and hidden defaults.

Bridging Finance Inc.’s receiver is suing Ernst & Young LLP for C$1.4 billion ($1 billion), alleging the auditor failed to detect fraud and misstatements that contributed to the Toronto private lender’s collapse.

In a claim filed with Ontario’s Superior Court last month, PricewaterhouseCoopers alleged that EY issued unqualified opinions on Bridging’s books from 2014 to 2020 despite red flags, including inflated asset values and hidden defaults.

Bridging managed more than C$2 billion at its peak, focusing on high-risk loans to borrowers shut out by traditional banks. The Ontario Securities Commission appointed PwC to take control of the firm in 2021 over concerns that investor money was being misused.

PwC claims Bridging’s top brass, including the husband-and-wife team running the private lender, used misleading accounting to boost the funds’ net asset value and collect excessive fees. The duo, David Sharpe and Natasha Sharpe, were found by Ontario’s Capital Markets Tribunal to have committed fraud and obstructed regulators in a case the OSC called “one of the most grievous” to come before the tribunal.

David Sharpe, who was Bridging’s chief executive officer, was permanently banned from working or trading in the capital markets in Ontario last month. Former Chief Investment Officer Natasha Sharpe will be allowed to trade in some personal accounts if she meets the penalties and repayment obligations outlined in the decision by Ontario’s Capital Markets Tribunal. More than 26,000 investors were affected by the fraud.

The receiver alleges EY failed to adequately probe Bridging’s use of payment-in-kind loans — where interest is added to the principal balance of loans, rather than paid in cash. The auditor also failed to catch the firm’s misclassification of loan risks, according to the lawsuit.

“At EY Canada, we take our role and responsibilities as auditors very seriously, and stand behind the quality and integrity of our historical work as auditor for Bridging Finance Inc.,” the firm said in a statement, adding it would respond to the allegations through legal channels.

PwC did not immediately respond to requests for comment.

As receiver, PwC recovered about C$698 million as of Oct. 31, and in April an Ontario court approved an initial distribution of C$321 million to unitholders.

The receiver estimates it can eventually recover as much as C$880 million from the funds. The lawsuit was reported first by the Globe and Mail newspaper.

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