Penalty order follows conviction in case affecting over 25,000 investors
The Ontario Capital Markets Tribunal has ordered David and Natasha Sharpe, the architects of the Bridging Finance Inc. investment scheme, along with former chief compliance officer Andrew Mushore, to pay more than $27 million in penalties following their conviction for investment fraud. The ruling, announced Wednesday, comes after their conviction in October 2024.
According to a report by The Globe and Mail, the Tribunal, an independent division of the Ontario Securities Commission (OSC), imposed administrative penalties of $3.6 million on David Sharpe, $1.95 million on Natasha Sharpe, and $50,000 on Mushore. Furthermore, the Sharpes are mandated to surrender $20,803,770.27 in ill-gotten gains to the OSC through a disgorgement order, with David Sharpe alone accountable for over $18 million of that amount. The couple must also collectively cover over $1.2 million in costs for the regulator’s investigation.
The Tribunal’s order described David Sharpe’s misconduct as “among the most serious frauds to come before the Tribunal.” His decades of experience in the financial-services industry, including a period managing the investigative arm of the Mutual Fund Dealers Association, were cited as aggravating factors. “David’s background makes his conduct particularly galling,” the Tribunal stated, emphasizing the betrayal of trust.
David Sharpe’s lawyer, Alistair Crawley, indicated an appeal of the decision, citing concerns about the fairness of the process. David Sharpe did not attend the April penalty hearing. Natasha Sharpe, who was present, claimed an inability to pay but failed to provide sufficient evidence of financial hardship.
A sophisticated and costly fraud
The OSC’s investigation unveiled a sophisticated scheme. It highlighted 15 kickback payments, including nearly $20 million David Sharpe personally received from loans linked to businessman Sean McCoshen, who later declared bankruptcy with significant debts to Bridging. Another instance involved the Sharpes diverting a $40 million loan, initially intended for a client, to repurchase Ninepoint Partners LP’s stake in Bridging without the client's knowledge. The third set of fraudulent loans involved $30 million diverted to businessman Gary Ng, which he used to acquire a 50% ownership in Bridging. All three individuals also obstructed the OSC investigation.
At its peak, Bridging Finance managed $2.09 billion on behalf of 26,000 investors, with retail investors forming a substantial portion. By the time Bridging entered receivership in 2021, an estimated $1.3 billion, nearly two-thirds of its managed funds, had been lost.
As a consequence of their actions, the Sharpes are permanently banned from participating in Ontario capital markets, though Natasha Sharpe may trade in registered accounts once her fines are paid. While the total penalties represent a fraction of the funds defrauded, they rank among the largest ever issued in a single OSC enforcement action, underscoring the severity of the misconduct. The OSC continues to face challenges in collecting fines, with a collection rate of just 4.5% in its most recent fiscal year.
