Cathie Wood-Linked Canadian Fund Manager Emerge Canada Accused Of Misappropriating $6 Million From Investors By Ontario Regulator

The Ontario Securities Commission has filed allegations against former investment fund manager Emerge Canada Inc. for violating securities laws by misappropriating an estimated $6 million from investor funds.

What Happened: The OSC alleges Emerge, which sold Toronto-listed versions of Cathie Wood‘s ARK exchange-traded funds, engaged in self-dealing by taking investor money through prohibited loans over four years to sustain its struggling business operations.

According to the allegations, Emerge caused its funds to enter into a series of transactions that transferred money from fund accounts to Emerge Canada and its U.S. affiliate, recording these as receivables owed back to the funds. By December 2022, these receivables had grown to nearly $6 million, representing approximately 6.1% of the funds’ net asset value.

“Emerge acted in its own interests by knowingly taking an estimated $6 million of investor money in self-dealing loans,” the OSC stated in its filing, adding that most of the money was used “to prop up its own businesses that were experiencing financial distress.”

Wood’s ARK Invest did not immediately respond to Benzinga's request for comment.

See Also: Cathie Wood Stands By ‘Deflationary Boom' Call As Gene Munster Compares Market Turmoil To Dot-Com Bubble

Why It Matters: The regulator also alleges that Emerge’s Independent Review Committee (IRC) members breached their duties by failing to properly address the conflict of interest created by the receivable, depriving investors of important safeguards.

Emerge’s registrations were suspended in February 2024 following a May 2023 Director’s decision that found the firm to be capital deficient. The funds were terminated in December 2023, with approximately $4.7 million still owing to investors.

The allegations also name two Emerge directors and officers, Lisa Langley and Desmond Alvares, along with three IRC members: Marie Rounding, Monique Hutchins, and Bruce Friesen.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.