Tribunal favours public proceedings in Bridging case

Ontario’s Capital Markets Tribunal has rejected a request for confidentiality in the Ontario Securities Commission’s (OSC) proceedings against Bridging Finance Inc. and one of the firm’s founders, David Sharpe.

The tribunal dismissed a request from Sharpe seeking a confidentiality order covering certain evidence filed as part of a proceeding to obtain a cease-trade order against Bridging. The decision said Sharpe failed to establish that privacy concerns raised by public disclosure of the evidence outweighed the need for transparency in its proceedings.

“We disagree with Sharpe’s submission that a confidential hearing is required by law,” the tribunal said in its decision. “We find that, among other reasons, in view of the considerable time that has elapsed since public disclosure of the subject materials, Sharpe has failed to meet the high bar required for us to depart from the general principle that tribunal proceedings should be open to the public.”

In April 2021, the OSC issued a temporary cease-trade order against Bridging and asked the Ontario Superior Court of Justice to appoint a receiver for the firm amid concerns about possible misconduct.

Earlier this year, the OSC also initiated enforcement proceedings against Sharpe and others, alleging that they violated securities rules and defrauded investors in the collapse of Bridging, which is expected to result in investors losing more than $1 billion.

None of the allegations have been proven.

However, prior to that, Sharpe sought a confidentiality order arguing that evidence the regulator relied upon in support of the cease-trade order included compelled testimony that shouldn’t be disclosed and violated his privacy rights.

The tribunal rejected that argument. “Sharpe points to no statutory or similar provision that requires that the hearings in staff’s initial application and subsequent motions to extend the temporary order be confidential,” it said. “We are aware of no such provision or rule.”

It also said that privacy concerns must be weighed against the need for open, public proceedings.

“The need to protect privacy interests must be balanced against the strong presumption in favour of the open court principle,” the tribunal said in its decision.

“Indeed, as the tribunal has held, investors, those being regulated, and the general public all have a strong interest in knowing what the tribunal is doing and why. Proceedings before the tribunal should be public to the broadest extent possible.”

In this case, given that the contents of the compelled testimony have been public for so long — as part of the court-ordered receivership process — and that Sharpe has not pursued a court order requiring confidentiality, the tribunal ruled in favour of openness.

The tribunal also rejected the claim that releasing evidence used in support of the cease-trade order proceedings could hurt Sharpe’s ability to get a fair hearing in the OSC’s pending enforcement proceedings against him.

“Sharpe makes this bald assertion of potential prejudice, but does not specify the nature of that prejudice, which is not obvious, especially given that the material is already public,” it said.

As a result, the tribunal dismissed Sharpe’s request and issued an order releasing the material that’s been filed in the cease-trade proceedings.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.