The Ontario Securities Commission (OSC) has published final rules to implement a new statutory framework that will facilitate distributing amounts collected by the OSC under disgorgement orders to harmed investors. Disgorgement is a type of monetary sanction imposed by the Capital Markets Tribunal or the Ontario Superior Court of Justice. Disgorgement sanctions require the respondent in a proceeding to pay any amounts obtained because of their non-compliance with securities law or commodity futures law.
Once the rules come into force, under the new process, the OSC will highlight each disgorgement order on a new section of the OSC website and provide investors with the ability to register their contact information if they would like to be contacted about a potential future distribution of disgorged amounts collected under the order. This new section of the website will also allow investors to stay informed about any amounts collected under the order, and whether the OSC has started a distribution. It will also outline how investors can submit claims.
“The new distribution framework provides investors who are harmed by misconduct that results in a disgorgement order with a streamlined and transparent framework to recover parts of their losses from amounts collected by the OSC,” said Naizam Kanji, General Counsel and Executive Vice President, Legal and Governance, Ontario Securities Commission. “While the OSC will also continue using no contest settlements and receiverships to return money to harmed investors in appropriate cases, this new process is an important addition to the OSC’s investor redress toolkit.”
Pending the coming into effect of legislative amendments to the Ontario Securities Act, Commodity Futures Act and Securities Commission Act, 2021, the new rules are expected to come into force in late summer or early fall 2025. The new rules follow careful consultation with stakeholders and support the implementation of the modernized distribution framework prescribed by the 2023 legislative amendments to the Ontario Securities Act, Commodity Futures Act and Securities Commission Act, 2021. The introduction of this new statutory distribution framework aligns the OSC with other Canadian and international regulators with similar distribution frameworks.
The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at https://www.osc.ca.
