On September 1, 2025, the Ontario Securities Commission (OSC) announced that the new statutory framework and related OSC Rules governing the distribution to harmed investors of funds collected under OSC disgorgement orders (the Framework) came into effect. To support the Framework, the OSC concurrently launched a new section on its website to inform harmed investors about the distribution process. The Framework applies to disgorgement orders issued on or after September 1, 2025.
This follows the OSC's initial announcement of the Framework on June 12, 2025, which is discussed in greater detail in our insight, A Fair Share: OSC Finalizes Framework to Return Disgorged Funds to Harmed Investors. The landscape prior to the Framework gave power to the Capital Markets Tribunal and the Ontario Superior Court of Justice to make disgorgement orders, with no statutory requirement mandating how the collected funds would be distributed or whether they would be distributed to harmed investors. The Framework will help investors who were directly harmed by the conduct that resulted in the order to receive distributed funds.
Summary of the Framework
The Framework
Under the Framework, any disgorgement orders issued on or after September 1, 2025, require the OSC to make amounts received under disgorgement orders available for distribution, unless:
- the disgorgement order relates to a contravention of the "insider trading or tipping" prohibition in section 76 of the Securities Act (Ontario); or
- the administrative costs of the distribution outweigh the amount collected under the disgorgement order and the number of potential harmed investors.
Should the OSC receive money under a disgorgement order, other than a disgorgement order that falls within one of the two exceptions listed above, it will:
- publish the amount received under the disgorgement order;
- issue a press release and post a notice of the claims process if sufficient amounts have been received and a distribution has started; and
- publish a report on each completed distribution.
The distribution can be carried out by either a third-party administrator appointed by the Ontario Superior Court of Justice, following a process established by the court, or by the OSC itself, following a process set out in the Framework. The OSC also has the ability to temporarily hold collected funds if the amount is insufficient to make an immediate distribution. If after three years there are not enough funds collected to carry out the distribution, any funds received can then be used for other authorized purposes such as investor education.
The Framework does not prevent investors from pursuing other avenues of loss recovery, including seeking direct damages through a civil claim.
The OSC Website
In addition to informing investors about the distribution process, the OSC's website allows investors to view new disgorgement orders, register to receive updates about potential future distributions, track amounts collected under each disgorgement order and access details about any related distribution process and how to submit a claim.
News releases published on the OSC's website will inform investors of new disgorgement orders and will also provide information about how investors can stay informed about a potential future distribution by submitting an online Contact Information Form. If eligible, the OSC will then allow the investor to participate in a claims process once the distribution is announced.
Final Thoughts
The Framework reflects a notable initiative by the OSC to align with its mandate by providing an efficient process for distributing disgorged funds to harmed investors. It also brings the OSC's approach in line with similar distribution mechanisms used by regulators in other provinces such as British Columbia and Quebec.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
