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OSC Targets Bridging Auditor: A New Chapter in the Fallout

April 01, 2026

The unraveling of Bridging Finance continues to expose deeper fault lines in Canada’s private credit ecosystem. The latest development shifts focus away from borrowers and insiders and squarely onto one of the system’s key gatekeepers: the auditor.

In late March 2026, the Ontario Securities Commission (OSC) initiated enforcement proceedings against KPMG LLP, alleging significant failures in its audits of four Bridging Finance funds during 2019 and 2020. (Investment Executive)

This is not a minor procedural dispute. The regulator is effectively arguing that the audits themselves helped sustain investor confidence in a structure that would ultimately collapse.

The Core Allegation: Audit Failure at the Point That Mattered Most

At the center of the OSC’s case is a straightforward but consequential claim: KPMG failed to properly scrutinize the valuation of the loans held within the Bridging funds. (Investment Executive)

These loans were not a peripheral issue. They were the funds.

According to the OSC, the auditor:

Did not perform sufficient procedures on loan valuations
Failed to adequately challenge management assumptions
Did not apply appropriate professional skepticism

In practical terms, this meant that the most critical input in the financial statements was not rigorously tested. (OSC)

The implication is stark: if the loans were overstated, then everything built on top of them — NAV, pricing, investor confidence — was also distorted.

“False Confidence” and Inflated Pricing

One of the most important elements of the OSC’s allegations is not just what was missed, but the downstream effect.

The regulator claims that flawed audits allowed investors to purchase fund units at inflated prices. (Investment Executive)

This aligns with a broader narrative that has emerged since Bridging’s collapse:

Financial statements appeared credible
Audit opinions reinforced that credibility
Investors relied on both

Audited financials are not just compliance artifacts. They are trust mechanisms.

In this case, the OSC is alleging that trust was misplaced.

Eight Audit Reports, Eight Alleged Breaches

The OSC goes further by framing each audit report as a separate breach.

KPMG issued eight auditor reports across the 2019 and 2020 audits. Each one, the regulator alleges, falsely stated compliance with Canadian generally accepted auditing standards (GAAS). (Investment Executive)

That transforms this from a single failure into a pattern.

And from a legal standpoint, it raises the stakes considerably. Reports suggest potential penalties could reach into the tens of millions. (Prism Media)

Timing Matters: The Audit and the Collapse

The timeline is difficult to ignore.

Final audit reports issued: early 2021
Bridging placed into receivership: April 30, 2021 (OSC)

Within weeks, a firm that had been presented as financially sound was effectively insolvent.

This proximity reinforces the regulator’s position that the audits failed to capture material issues that were already present.

The Bigger Picture: Gatekeepers Under Scrutiny

This enforcement action is about more than one audit firm.

It signals a broader regulatory posture:

Auditors are not passive reviewers
They are market gatekeepers
Their work directly influences capital allocation

The OSC explicitly emphasizes the role of audits in maintaining confidence in capital markets. (OSC)

When that confidence is undermined, the consequences extend beyond a single fund.

Bridging Finance: Still Unfolding

The Bridging collapse remains one of the most significant investment failures in Canada, with estimated investor losses of roughly $1.3 billion. (Wikipedia)

Legal actions continue on multiple fronts:

Claims against former executives
Civil litigation against auditors
Now, regulatory enforcement

Each layer adds to a growing picture of systemic breakdown.

What This Means Going Forward

The OSC’s case against KPMG raises several critical questions for the industry:

How deeply should auditors challenge valuation models in private credit?
Where is the line between management responsibility and audit accountability?
Can investors rely on audited financials in opaque asset classes?

For private credit markets in particular, where pricing is inherently less transparent, these questions are not theoretical.

They are structural.

Final Thought

The Bridging story has never been only about one failed lender. It has been about how investor money moved through a system where conflicts, weak oversight, and opaque transactions were allowed to compound over time.

The public record is now much broader than allegations alone. The Capital Markets Tribunal found that David Sharpe and Natasha Sharpe engaged in fraud involving the misuse of investor funds through a series of conflicted transactions.

Those transactions were not isolated. They intersected with individuals like Gary Ng, whose dealings with Bridging — including loans tied to his acquisition of an ownership stake — became part of the broader pattern examined by regulators, courts, and the receiver.

Now, with the OSC pursuing allegations against KPMG over its audits of Bridging funds, the circle of accountability expands again.

This is no longer just about management decisions or borrower relationships. It is about the entire chain of trust – from origination to oversight to independent audit.

Bridging was not only a story about David Sharpe, Natasha Sharpe, or Gary Ng. It was a story about what happens when conflicted transactions, weak controls, and insufficient scrutiny are allowed to coexist inside a private market structure built on confidence.

And when that confidence breaks, responsibility does not stop at management.