PricewaterhouseCoopers, acting as court-appointed receiver for the collapsed Toronto private lender Bridging Finance Inc., has sued Ernst & Young for C$1.4 billion, alleging that EY’s audits between 2014 and 2018 failed to detect years of fraud and financial misstatement that ultimately cost more than 26,000 investors over a billion dollars. The Bridging Finance Ernst & Young lawsuit was filed on June 11, 2025, in Ontario’s Superior Court of Justice.
What PwC Is Alleging
The claim names EY on three legal theories: breach of contract, negligence, and negligent misrepresentation.
Between 2014 and 2018, EY issued 20 unqualified audit reports for Bridging Finance and several of its funds. An unqualified opinion is a clean bill of health. PwC says those opinions were wrong, and that a properly conducted audit would have caught inflated asset values, hidden loan defaults, and the misclassification of loan risks. The receiver’s position is that clear warning signs were present and were missed.
One allegation in the pleading is specific. PwC claims Bridging routinely used “payment-in-kind” loans, which allow borrowers to roll unpaid interest into the loan principal instead of paying it in cash. According to the claim, EY knew Bridging was doing this on certain loans but never required the company to correct financial statements that indicated all interest was being paid in cash. PwC further alleges the PIK loans were under-secured and backed by improperly valued collateral.
PwC’s theory is that if the audits had been done properly, the clean opinions would never have been issued, the funds would not have continued to attract retail money on the strength of those opinions, and the losses now being tallied by the receivership would have been avoided.
EY’s Response
EY has denied wrongdoing. The firm has said publicly that it stands behind “the quality and integrity” of its historical audit work for Bridging Finance and that it will “vigorously respond” to the allegations in court. As of mid-2026, no court rulings or scheduled hearing dates in the case have been publicly reported.
The Fraud EY Is Alleged to Have Missed
The lawsuit is a civil claim about audit quality, but it exists because of a separate, established finding of fraud at Bridging. On October 28, 2024, Ontario’s Capital Markets Tribunal ruled that Bridging’s leadership had perpetrated three securities frauds diverting more than $100 million in investor funds.
The central figures were CEO David Sharpe, Chief Investment Officer Natasha Sharpe, and Chief Compliance Officer Andrew Mushore. The Tribunal found:
- David Sharpe arranged more than $150 million in loans to the Alaska-Alberta Railway Development Corporation, controlled by businessman Sean McCoshen, and over $115 million to Peguis First Nation. Loan proceeds were cycled through McCoshen’s companies back to David Sharpe as kickbacks totaling roughly $19.5 million between 2016 and 2019. Natasha Sharpe received $250,000. At least $18.2 million of these payments were traceable to investor capital.
- The Sharpes misappropriated roughly $40 million from a Bridging fund to buy out Ninepoint Partners’ management interest in 2019, routing the money through a circular loan structure involving a third party to disguise its origin.
- Bridging loaned approximately $30 to $50 million in investor funds to companies owned by Gary Ng so Ng could buy 50 percent of Bridging’s shares from existing shareholders, including Natasha Sharpe. The collateral Ng offered was fake. Both Sharpes received $500,000 in connection with the deal.
The Tribunal also found that the three respondents obstructed the OSC investigation. David Sharpe directed the permanent deletion of approximately 34,200 emails from company servers, targeting search terms including “Sean McCoshen” and his numbered company. The Sharpes fabricated documents and provided misleading testimony.
Before the fraud came to light, Bridging had grown into a substantial firm, managing about $2.09 billion at its peak through partnerships with Sprott Asset Management and, later, on its own. Its private debt funds were sold through every major Canadian bank and independent brokerage, and were popular with retail investors, many of them elderly, drawn by roughly 8 percent annual returns. The Ontario Securities Commission opened a formal investigation on September 11, 2020, and applied to have Bridging placed in receivership on April 30, 2021. The court granted that order the same day and appointed PwC.
Where the C$1.4 Billion Figure Comes From
The C$1.4 billion sought from EY represents the gap between the value of Bridging’s assets at the time of receivership and what was owed to creditors and investors.
Actual recoveries have fallen well short of that. PwC estimates total ultimate recovery for investors at between 34 and 42 percent of the funds’ net asset value, or roughly $701 million to $880 million. By October 2024, PwC had recovered about $698 million. In early 2025, the Ontario Superior Court approved an initial distribution of $321 million to the 26,000 retail investors, a payout that was $170 million smaller than originally planned because of an outstanding $213 million disputed claim by Cerieco Canada Corp., a subsidiary of a Chinese state-owned enterprise. Further distributions remain tied up in that dispute and in the auditor litigation.
EY Is Not the Only Auditor Being Sued
PwC has filed a separate, parallel C$1.4 billion lawsuit against KPMG, which audited several Bridging funds starting in 2016 and all of them by 2019. That claim also alleges breach of contract, negligence, and negligent misrepresentation. KPMG has said it will “vigorously defend” its work.
The OSC has gone a step further with KPMG than it has with EY. On March 31, 2026, the regulator filed a formal enforcement proceeding alleging that KPMG’s 2019 and 2020 independent auditor reports for four Bridging funds were “false” because KPMG failed to perform adequate audit procedures on loan valuations. A case management hearing before the Capital Markets Tribunal was scheduled for May 5, 2026. No equivalent regulatory proceeding has been reported against EY; the claim against EY is the civil suit brought by the receiver.
Status of the Case
The EY lawsuit is at an early stage. PwC filed in June 2025, EY has signaled it will defend, and no rulings or hearing dates have been reported as of mid-2026. The receivership itself shows no signs of winding down, with further investor distributions depending on the outcome of the auditor lawsuits, the Cerieco appeal, and the Sharpes’ own appeal and bankruptcy proceedings.