KPMG failed to scrutinize Bridging Finance enough in the two years before it was put into receivership, the Ontario Securities Commission argues in a new case. The auditor identified some overstated loans in the private credit firm’s portfolio, and should have investigated further, said the OSC’s complaint, which has not yet been heard by a judge. (The Logic)

Talking point: The OSC says the audits may have “given investors a false sense of confidence in the funds’ financial statements.” KPMG spokesperson Roula Meditskos said “these are allegations, not findings, and KPMG will vigorously defend our work throughout this process.” Bridging Finance loaned money to companies that traditional lenders viewed as risky, and had reported about $2 billion in assets under management at the end of 2020. The OSC asked the courts to put the firm in receivership in 2021, when an OSC forensic accountant determined that its executives got kickbacks and the firm misrepresented loans for its own benefit. Eventually, a tribunal determined that Bridging leaders David and Natasha Sharpe committed fraud, although the couple have argued an appeal and are awaiting judgment. KPMG’s case will go before a tribunal in May.