Whistleblowers have alleged fraud at Catalyst Capital, The Wall Street Journal reported Wednesday, citing documents it reviewed and people familiar with the matter.
The Journal said at least four people have filed complaints with the Ontario Securities Commission. The regulator is beginning to look into the allegations and interviewing people familiar with Catalyst, the newspaper reported.
In a lengthy response the Journal's article, Callidus Capital — of which Catalyst is the majority shareholder — said those allegations "are completely false."
"These allegations presented are primarily based on anonymous sources and are believed to have been initiated by individuals against whom Callidus has current litigation relating to the enforcement of guaranties. Those individuals have already had the opportunity to present their allegations in court without success. That is because the allegations are false," the company said in its statement.
"The Company knows of no legitimate basis for any whistleblower complaint. It is extraordinary that the press has been given copies of confidential whistleblower reports that neither Callidus nor Catalyst has ever seen. This is an effort by short sellers and others who are attempting to manipulate the market by making false allegations. Once made aware of these reports by the media, the Company proactively met with various authorities to discuss these matters in detail," it added.
Although the OSC may be exploring the matter, the moves may not result in a formal investigation. The regulator can award as much as 5 million Canadian dollars for each complaint that result in monetary sanctions.
"As a matter of general policy, we do not confirm or comment on the existence, nature or status of any complaint or investigation," the Ontario Securities Commission told CNBC.
With more than 6 billion Canadian dollars in assets under management, Catalyst is one of the largest private equity firms in Canada and primarily invests in distressed assets.
Catalyst is led by Newton Glassman, who the Journal said has described the firm as the "Goldman Sachs of Canada."