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OSC Allegations Against KPMG Deepen Scrutiny of Bridging Finance Collapse

April 17, 2026

In the latest wave of reporting and regulatory action surrounding Bridging Finance, allegations that KPMG “blew” its audit of the firm’s private credit funds have moved from technical critique to something more fundamental.

This is no longer just about whether procedures were followed. It is about whether the audit process itself functioned as intended in a high-risk, judgment-driven asset class.

At issue is a simple but critical question: how did a multi-billion-dollar private credit platform collapse so quickly after receiving clean audit opinions?

The Core Issue: Valuation in a Judgment-Based Market

Private credit is not a mark-to-market business. It is a mark-to-model system built on assumptions, projections, and internal estimates.

That makes audit scrutiny even more important.

Regulators allege that KPMG failed to properly challenge the valuation of loans within Bridging’s funds, which were the central assets driving investor returns.

When overstated loans were identified, the concern is that they were treated as isolated issues rather than signals of a broader portfolio-wide problem.

That distinction matters. In a portfolio built on judgment, isolated errors are rarely isolated.

Clean Opinions, Broken Outcomes

Bridging Finance built a private credit platform exceeding $2 billion, largely through high-risk lending structures that often relied on payment-in-kind interest and complex borrower arrangements.

During this period:

Audit opinions were issued without qualification
Financial statements appeared stable
Investors continued to allocate capital

Then, in April 2021, the firm entered receivership.

The gap between those two realities is now at the center of regulatory and legal scrutiny.

The Lawsuit That Raises the Stakes

Beyond regulatory action, the financial exposure tied to the audits is significant.

PwC, acting as receiver, has filed a $1.4 billion lawsuit against KPMG, alleging that negligent audits failed to detect misstatements and red flags that ultimately contributed to investor losses.

The argument is not subtle:

If the audits had been performed differently
If valuation issues had been escalated
If broader skepticism had been applied

The outcome for investors may have been materially different.

A Pattern, Not an Exception

The Bridging case is not occurring in isolation.

Across multiple jurisdictions and high-profile collapses, audit firms have faced similar criticisms:

Failure to challenge management assumptions
Overreliance on internal models
Missed signals in complex financial structures

The recurring theme is not technical error. It is mindset.

In the Bridging case, regulators allege that audit evidence was not sufficiently challenged or validated, raising questions about whether the process became procedural rather than investigative.

The Human Layer: Transactions and Accountability

As with the broader Bridging narrative, the audit issue does not exist in a vacuum.

The Capital Markets Tribunal has already found that David Sharpe and Natasha Sharpe engaged in fraud involving the misuse of investor funds through conflicted transactions.

Those transactions intersected with figures such as Gary Ng, whose financial dealings with Bridging became part of the wider network examined by regulators and the receiver.

The audit process sat on top of that structure.

And now, it is being asked whether it properly interrogated what it was reviewing.

Private Credit’s Structural Weakness

The Bridging collapse is exposing a deeper issue within private credit markets.

Unlike public markets:

Pricing is not continuously tested
Liquidity is limited
Transparency is constrained

This places disproportionate weight on:

Internal valuation processes
Governance structures
Independent audit

If any one of those layers fails, the entire system becomes vulnerable.

What This Means for the Industry

The implications of the “blown audit” allegations extend far beyond one firm.

They raise fundamental questions:

Can audit frameworks keep pace with complex private credit structures?
How should materiality be assessed when valuations are inherently subjective?
What does true professional skepticism look like in illiquid markets?

These are not academic questions. They are central to capital allocation across the private credit ecosystem.

Final Thought

The Bridging collapse is often framed as a failure of management.

That is only part of the story.

From the actions of David Sharpe and Natasha Sharpe, to the transaction networks involving borrowers such as Gary Ng, the case has already demonstrated how misconduct and conflicted structures can take root.

But what is now becoming clear is that those issues existed within a system that was reviewed, validated, and ultimately signed off.

The allegations against KPMG shift the focus to that system.