KPMG offices in Ottawa in June, 2024. KPMG could face up to $40-million in fines, the OSC says.Sean Kilpatrick/The Canadian Press
KPMG LLP failed to properly audit private debt manager Bridging Finance, according to the Ontario Securities Commission, and the accounting giant now faces up to $40-million in fines for allegedly not flagging problems in the years leading up to Bridging’s collapse.
In an enforcement document filed late Tuesday, the securities watchdog emphasized the importance of audited financial statements in fostering trust with investors, who rely on accounting firms such as KPMG to give them independent assessments of companies’ financial health. The OSC alleges that KPMG’s reports on Bridging instead gave investors a “false sense of confidence.”
As a private debt manager, Bridging Finance raised money from retail investors across multiple funds and then lent it out to borrowers who often could not obtain financing from traditional lenders such as Canadian banks. The four Bridging Finance funds that KPMG audited in 2019 and 2020 had a collective net asset value of $1.7-billion.
The securities watchdog alleges in the enforcement document that KPMG “failed to perform fundamental audit procedures over the most critical aspect of the financial statements – the valuation of the loans held within each of the funds.” The watchdog said these audits mattered to investors because they were “one of the only sources of independent information concerning the financial health of the four funds.”
Ontario securities regulator files to force former Bridging Finance executives into bankruptcy
At its peak, Bridging Finance managed $2.09-billion, but the company was put under the control of court-appointed receiver PricewaterhouseCoopers Inc. in April, 2021, after allegations of financial mismanagement. After PwC dug into Bridging Finance’s books, it estimated investors would lose $1.3-billion, meaning almost two-thirds of assets under management had vanished, marking one of the largest collapses of an investment manager in Canadian history.
The OSC said Tuesday KPMG could face up to $40-million in fines, or $5-million for each of eight audit reports it alleges were false and misleading. An initial hearing before the OSC’s Capital Markets Tribunal has been scheduled for May 5. Further hearings will likely be required to resolve the case, which could span several months.
“KPMG firmly disagrees with the OSC’s allegations,” spokesperson Roula Meditskos said in an e-mail. “These are allegations, not findings, and KPMG will vigorously defend our work throughout this process.”
“KPMG takes its role and responsibilities as auditor seriously and remains committed to the highest standards of audit quality and professionalism,” Ms. Meditskos said. “We stand behind our work as auditor of the Bridging funds.”
A number of the OSC’s allegations relate to putting too much trust in Bridging’s management, or failing to adequately question its assumptions.
In one example, the OSC references a $129-million loan. Referred to as Loan C, the loan was taken out in 2017 and was originally worth $32-million – however, the unnamed borrower breached its loan agreements “almost from the start, repeatedly failing to make required principal and interest payments,” according to the OSC, yet Bridging responded by extending, renewing and increasing the loan.
The borrower was a public company and its shares lost roughly 95 per cent of their value between December, 2018, and December, 2019, but the OSC found Bridging Finance had only set aside $2.5-million as a financial cushion if the loan was not repaid.
The regulator alleges KPMG was aware the borrower had breached its loan agreement, and yet, the auditor did not make Bridging management label the loan as impaired.
“KPMG failed to subject Bridging Finance management’s judgments and estimates to effective scrutiny, even where those judgments and estimates appeared unreasonable and suggested potential management bias,” the OSC alleged.
KPMG also failed to adequately respond to at least one case of fraud, the OSC alleged. The auditor was informed in September, 2020, that businessman Gary Ng – who bought 50 per cent of Bridging and had received $113-million in Bridging loans – lied about the collateral he used to backstop the loan. Despite this information, KPMG did not think to question the collateral used to backstop other major loans in the portfolio, the OSC alleged.
“KPMG’s actions had consequences for investors, who bought units of the funds at inflated prices and made investment decisions regarding their positions that they may not otherwise have made,” the OSC alleged.
The OSC’s allegations follow a lawsuit against PwC in 2023 when the receiver sued the auditor for $1.4-billion on behalf of Bridging’s investors.
KPMG has also recently drawn the ire of its own industry regulator. On March 11, the Canadian Public Accountability Board (CPAB), which oversees accounting firms that serve as public company auditors, published its first-ever inspection reports for individual companies under its purview.
CPAB said it had flagged deficiencies in 20 per cent of the KPMG audit files it inspected in 2025, the most of any major accounting firm reviewed last year.
David and Natasha Sharpe at the Bridging Finance Toronto offices in 2019. The husband and wife were found guilty of investment fraud in October, 2024.Fred Lum
Founded in 2012, Bridging was led by husband-and-wife team David and Natasha Sharpe, who were chief executive officer and chief investment officer, respectively. Bridging’s business was focused on providing high-interest, short-term loans to borrowers deemed too risky for traditional financing options.
A large number of retail investors were able to buy into Bridging Finance as its funds were sold by all of Canada’s largest banks and major brokerage firms. At its peak, Bridging had roughly 26,000 investors, and the receiver said most were retail buyers.
The Sharpes were found guilty of fraud by an OSC Tribunal in October, 2024, alongside Andrew Mushore, Bridging’s former chief compliance officer. In June, 2025, they were ordered to pay more than $27-million for their role in defrauding their investors.
The OSC has previously levelled allegations against auditors. In 2014, Ernst & Young LLP reached a no-contest settlement with the OSC and agreed to pay $8-million over allegations of negligent audit work for Chinese-based firms Sino-Forest Corp. and Zungui Haixi Corp., both of which collapsed in 2011.
In its current case against KPMG, the OSC said auditors are gatekeepers who contribute to public confidence. Auditors who falsely claim to follow generally accepted auditing standards, the OSC said, harm investors and undermine the public interest.