The proposed rule specifies the following:
- When money received under disgorgement orders must be distributed.
- Eligibility requirements for investors seeking payment.
- The distribution process when no court-appointed administrator is used.
- Use of other monetary sanctions and settlement payments to cover administrative costs related to distributing disgorged amounts.
Disgorgement, imposed by the Capital Markets Tribunal or the Ontario Superior Court of Justice, requires respondents to pay any amounts obtained through non-compliance with securities or commodity futures law.
Currently, no prescribed process exists for distributing these funds to harmed investors.
Although disgorgement orders do not aim to compensate investors, the legislative amendments allow for distributing funds to investors who suffered direct financial losses due to the conduct leading to the order.
Under the proposed rule, the OSC must publish a report on each completed distribution to promote transparency and awareness. Additionally, the OSC will develop plain-language resources to help investors understand the new statutory distribution framework and the payment application process.
