Regulator finalizes rules to distribute disgorged funds to harmed investors starting in late 2025
The Ontario Securities Commission (OSC) has finalized a statutory framework that will guide how funds collected under disgorgement orders are distributed to investors who suffered financial losses from securities or commodity futures law violations.
Scheduled to come into effect in late summer or early fall 2025, the new framework follows legislative changes to the Ontario Securities Act, the Commodity Futures Act, and the Securities Commission Act, 2021. These amendments were introduced under the Building a Stronger Ontario Together Act, 2023, and received Royal Assent in December 2023.
Under the finalized OSC Rules 11-502 and 11-503 and their companion policies, the Commission will publish details of disgorgement orders on a new section of its website. Investors will be able to submit their contact information to receive updates and, when eligible, file claims. This section will also provide information about funds received and the status of any distributions.
Disgorgement orders are monetary sanctions requiring individuals or companies to repay amounts earned from non-compliance with securities law. The new rules apply only to funds received under orders issued after the amendments come into force.
Naizam Kanji, general counsel and executive vice president, legal and governance, said the distribution process is intended to give investors a “streamlined and transparent framework” to recover losses from funds the OSC collects.
The framework outlines eligibility requirements, timelines, and processes. To be considered, claimants must demonstrate direct financial loss and show they did not participate in the misconduct. Legal representatives such as trustees or executors may file on behalf of claimants unable to do so directly. Claims must be submitted using OSC forms and supported by documentation.
If the amount collected under a disgorgement order is insufficient to cover all claims, the OSC may allocate funds on a pro-rata basis. The Commission may hold partial collections for up to three years before deciding whether a distribution is warranted, based on the likelihood of recovering additional funds and the costs of distribution.
While the OSC may directly administer some distributions, the Commission can also request the appointment of a court-approved administrator in complex cases. Payment methods will primarily include direct deposit, with checks issued only in specific situations.
A report summarizing each completed distribution, including amounts recovered, paid, and used for administrative costs, will be published within 60 days of final disbursement.
