OSC probes Emerge Canada after investment manager shut down funds

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Investor advocate says unitholders should question where auditor, regulators were as Emerge’s financial condition declined

The Ontario Securities Commission is probing Emerge Canada Inc. even after the troubled investment manager shut down all its retail funds by the end of last year.

On April 14, 2023, the OSC imposed a temporary cease trade order on the company’s 11 exchange-traded funds because the funds were unable to file audited financial statements after auditor BDO Canada LLP resigned. In April,that Emerge Canada, which managed about $118-million in assets at the time, owed a total of $2.53-million to its Emerge ARK funds.suspended Emerge Canada’s operating licence, saying the amount owed had increased to $5.

Emerge Canada revealed Dec. 14, 2022, that, nearly six weeks earlier, BDO had resigned as the auditor of its funds. In regulatory filings, Emerge and BDO said there were no disputes over accounting issues. Ms. Foubert wrote she did not accept Emerge Canada’s assertion that because the loan was a current asset in the last BDO-audited financial statements, Emerge Canada could continue to say it was. “I don’t find this reliance reasonable considering the material increases in the related-party receivable.”

But Matthew Lazroe, a lawyer for the ex-employees, told the judge three days later his clients declined the settlement offer.

 

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