Lawyers for tens of thousands of retail investors with money in Bridging Finance Inc.’s investment funds are asking an Ontario court to allow them to represent those unitholders amid an investigation into the troubled Toronto-based private lender by Canada’s top capital markets regulator.

An Ontario court appointed PricewaterhouseCoopers Inc. (PwC) to take control of Bridging Finance on Apr. 30 at the request of the Ontario Securities Commission. That decision was made pending the outcome of an investigation into allegations the lender and its then-senior executives, including Chief Executive Officer David Sharpe and his wife Natasha, who was chief investment officer at the firm, mismanaged funds and failed to disclose conflicts of interest. The Sharpes were subsequently fired from their roles after PwC stepped in. The allegations have not been proven.

According to a court document filed Monday, a team of lawyers at Toronto-based Weisz Fell Kour LLP submitted a motion to the Ontario Superior Court asking to be assigned as representative counsel for approximately 25,000 retail investors who invested in Bridging Finance's funds and may either be unfamiliar with the court proceedings or financially unable to retain their own lawyer to recover their investments.

"The retail investors are the most vulnerable unitholders in this proceeding and it would be unjust to deny funded legal counsel to the very people who bear the greatest burden of any liquidation losses but have the least means to mitigate them," according to the filing.

The motion will be heard by an Ontario Superior Court judge Wednesday morning, according to the filing.

As receiver, PwC proposed to create limited partnership advisory committees that would solicit feedback from two groups of Bridging Finance fund unitholders to relay feedback on decisions made by the court monitor.

While the committees would include several brokers and institutional investors, retail investors would only account for two members of one group. However, the filing from the Weisz Fell Kour legal team described the committees as "toothless tigers" with limited capacity to represent the interests of any relevant parties.

"The retail investors are a vast and disconnected group, comprised of many persons unsophisticated in financial or legal matters, and who cannot individually afford to incur legal fees in what will undoubtedly be a long receivership," the filing states.

Tracey Fellowes, a 63-year-old retiree who invested almost $120,000 with her husband in Bridging Finance funds, is one retail investor who would like to be represented by a separate group of lawyers, rather than be part of a committee.

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Courtesy: Tracey Fellowes

"We need to have someone speaking for us directly, not the people that got us into Bridging in the first place," she said in a phone interview. BNN Bloomberg reviewed documents confirming Fellowes’ investments.

Fellowes, who used her existing financial advisor, Richardson Wealth Ltd., to invest in the funds on her and her husband's behalf roughly two years ago, said that there's a potential conflict of interest by having brokers and money managers take part in the same committee where their interests may not be aligned with retail investors.

"I feel that [Bridging Finance] should probably be liquidated and all the assets they can get from David Sharpe, or Natasha Sharpe and whoever else was involved, [should] pay the investors back," Fellowes said. "There's a lot of people involved that will get paid. How much is going to be left for us?"

A Richardson Wealth spokesperson told BNN Bloomberg in an email that the firm is, "monitoring the situation carefully, engaging with PwC which is overseeing Bridging, and keeping our clients up to date every step of the way.”

Lawyers representing PwC and Bridging Finance were not immediately available for comment.