The Ontario Securities Commission (OSC) has published a new statutory framework that will facilitate distributing amounts collected by the OSC under disgorgement orders to harmed investors (the Final Rules).
Briefly, the Final Rules consist of:
- OSC Rule 11-502 Distribution of Amounts Received by the OSC under Disgorgement Orders and Payment of Related Administrative Costs;
- Companion Policy 11-502 Distribution of Amounts Received by the OSC under Disgorgement Orders and Payment of Related Administrative Costs;
- OSC Rule 11-503 (Commodity Futures Act) Distribution of Amounts Received by the OSC under Disgorgement Orders and Payment of Related Administrative Costs;
- Companion Policy 11-503 (Commodity Futures Act) Distribution of Amounts Received by the OSC under Disgorgement Orders and Payment of Related Administrative Costs – Modernize the Process to Distribute Disgorged Amounts to Harmed Investors
Once the Final 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.
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.
Pending the coming into effect of legislative amendments to the Ontario Securities Act, Commodity Futures Act and Securities Commission Act, 2021, the Final Rules are expected to come into force in late summer or early fall 2025.
The Final Rules are 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.