(Bloomberg) -- The husband-and-wife duo that ran private lender Bridging Finance Inc. has been fired by a court-appointed receiver as Canada’s main securities regulator investigates the firm over alleged mismanagement and self-dealing.

PricewaterhouseCoopers, which took control of Bridging at the request of the Ontario Securities Commission, fired David and Natasha Sharpe from the firm they co-founded almost a decade ago. The move came less than a week after the regulator said it was investigating the executives at the firm, which had about C$2 billion ($1.7 billion) in assets under management as of December.

“The decision of the receiver is regrettable but not surprising,“ David Sharpe said in an emailed message. “Notwithstanding our termination, we will cooperate with the receiver to the extent possible in the interests of investors while we address the OSC’s misguided allegations.”

The Toronto-based firm lends to small and mid-sized companies involved in everything from milling flour to delivering groceries. It attracted a following in particular among high-net-worth individuals with promises of steady gains from its loan portfolio. Those investments are now frozen, and it’s unclear how much will be recouped after the company emerges from receivership.

In court documents made public last weekend, the OSC alleged the firm and senior executives mismanaged funds and failed to disclose conflicts of interest.

Among the alleged conflicts, David Sharpe received C$19.5 million in undisclosed payments into his personal checking account from a company controlled by entrepreneur Sean McCoshen, the commission says in documents. During that same period, Bridging’s funds had lent more than C$100 million to other companies of McCoshen’s, the commission said in the documents.

According to an affidavit by OSC forensic accountant Daniel Tourangeau, much of the undisclosed money was moved into David Sharpe’s personal investment accounts.

The OSC said Friday that Bridging and some of its directors and officers, including David Sharpe, may have taken actions “which they knew or reasonably ought to have known perpetrated a fraud on unitholders” of the funds. They may have made statements that were “misleading or untrue” to the regulator, according to an OSC document. Bridging may have also “failed to deal fairly, honestly and in good faith with its clients.”

Another central accusation is that Bridging misappropriated about C$35 million “to complete an acquisition for its own benefit” -- a deal with investment manager Ninepoint Partners LP for an interest in an income fund the two firms had been jointly operating.

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