The Canadian Investment Regulatory Organization (CIRO) is publishing for comment proposed amendments to the Mutual Fund Dealer (MFD) Rules to specifically provide for disgorgement to conform with the Investment Dealer and Partially Consolidated (IDPC) Rules (the “Proposed Amendments.)
CIRO is publishing the Proposed Amendments for a comment period ending September 22nd, 2025.
In law, the concept of disgorgement refers to the return of all gains (either profits or avoidance of loss) resulting from illegal or unethical conduct. While the current IDPC Rules explicitly address disgorgement and fines as distinct types of sanctions, the MFD Rules do not provide for it. However, CIRO hearing panels adjudicating proceedings under the MFD Rules are empowered to impose fines of the same amount as the profit obtained or loss avoided.
To add clarity and predictability for Mutual Fund Dealer Members and their Approved Persons, the Proposed Amendments are intended to harmonize the drafting across the rule sets that allow CIRO hearing panels to order disgorgement by replicating the same provision that currently exists in IDPC Rules, and mirroring that drafting in the MFD Rules.
Canadian Investment Regulatory Organization (CIRO) – Proposed Amendments to the Mutual Fund Dealer Rules Respecting Disgorgement – Request for Comment is available for download from the website of the Ontario Securities Commission.
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.