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Miles Nadal, chairman and chief executive officer of MDC Partners, speaks at the Interactive Advertising Bureau (IAB) MIXX 2010 conference and expo during Advertising Week in New York, U.S., on Tuesday, Sept. 28, 2010.

Andrew Harrer/Bloomberg

The sudden resignation of CEO Miles Nadal and the chief accounting officer of MDC Partners Inc. is the latest fallout from an SEC investigation launched last year after a whistle-blower complained to the U.S. regulator about the company's accounting practices.

According to people familiar with the investigation, one of Mr. Nadal's former business associates alerted the U.S. Securities and Exchange Commission that MDC was allegedly masking its deteriorating financial condition in published financial statements and news releases. The complaint alleged that MDC was improperly understating executive compensation costs, overstating the value of certain assets and compensating Mr. Nadal for personal expenses.

The allegations were submitted in February, 2014, under the SEC's whistle-blower program, and within a few months, sources said, the regulator began formally investigating the Toronto advertising company.

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A spokeswoman for MDC said the company was not aware of the whistle-blower. She said the company first learned about the SEC investigation in October, when it received a subpoena from the regulator seeking financial, accounting and compensation information. Since then, she said, the company has implemented a new private aircraft, travel and entertainment policy. It has also hired an adviser to search for four new independent directors.

As part of his exit agreement announced Monday, Mr. Nadal agreed to repay $12.5-million (U.S.) in past compensation and expense payments. The company also said he was not eligible to receive $27.2-million in previously negotiated severance payments. The financial hits follow Mr. Nadal's agreement in April to return $8.6-million for travel, medical and other expense payments he received over a six-year period.

The company's chief accounting officer, Michael Sabatino, also resigned on Monday and agreed to repay more than $200,000 in cash bonus payments covering 2012 to 2014.

Mr. Nadal's unceremonious retreat from a company he founded in 1986 ends one of Canada's more controversial corporate reigns. Although MDC reported losses in all but one of the past 10 years, Mr. Nadal, who owns an 11.3-per-cent stake in the company, was handsomely compensated. Since 2011, he has earned more than $70-million in salary, bonuses and other compensation.

The rich pay fuelled a lavish lifestyle and a series of high-profile philanthropic ventures. Mr. Nadal, 57, primarily resides in Bermuda and has homes in Palm Beach, Fla., New York and Toronto. According to various automobile trade publications, he has amassed a vast auto collection that includes a custom-made 2014 McLaren P1 valued at more than $1-million, an Aston Martin and a Dodge Challenger purchased from Fiat CEO Sergio Marchionne in 2013.

He is an active donor to a broad variety of youth programs, schools, hospitals and Jewish organizations, including the UJA Federation of Greater Toronto.

Since he dropped out of university to go into business, Mr. Nadal has been shaping a narrative about his career as the journey of a self-made man who came from nothing. "I had no education, never had a job, fundamentally unemployable, and my first employees were my parents," he said in an interview last year.

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The son of a lawyer, he grew up in a modest Toronto neighbourhood. He has often said he'd like to call his autobiography Miles from Nowhere.

He went from nowhere to somewhere in a hurry. After he parlayed a $500 credit card loan into a photography business, he moved to create a fragmented marketing conglomerate that today includes more than 50 agencies in advertising, design, public relations and communications.

He began running his own photography business, then expanded into printing – from postage stamps to airline tickets and cheques. He acquired cheque printer Davis + Henderson Corp. in a $50-million deal in 1996. He eventually shed the printing business and focused on advertising, PR and communications, and everything he has built since then has been through acquisitions.

Mr. Nadal convinces creative entrepreneurs who have often built advertising and other communications firms from the ground up to let him be a "partner," as opposed to an acquirer – taking a stake rather than swallowing agencies whole. It's a formula that has succeeded with the likes of ad agencies Anomaly, 72andSunny and one of MDC's first major partnerships, Crispin Porter + Bogusky. He wooed those partners by promising to provide financial backing and get out of the way – something ad agency holding companies always promise upon acquisition, but don't always deliver.

"I've never met, in 35 years of business, a more savvy deal-maker than Miles," Scott Kauffman, who is replacing Mr. Nadal as chairman, said in an interview last year.

Mr. Nadal's passion for other people's ideas goes beyond how he built his business. It also informs much of his personality. Sit in conversation with him, or peruse his Twitter profile, and you will be bombarded with a stream of inspirational quotes.

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He has never been a typical deal-maker. Mr. Nadal hugs people in business meetings, and employees across the MDC Partners network have become accustomed to group e-mails featuring pictures of his golden retriever, Truman.

He has said that among his rules of business are that he will not partner with people who are not kind to animals and with whom he would not spend a long weekend in a small cabin.

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