Starting next month, harmed investors will be able to try to seek some payback under the Canadian Investment Regulatory Organization’s (CIRO) new program to pay out funds collected under disgorgement orders.
The self-regulatory organization is launching its “disgorgement distribution program” effective April 1, enabling investors that suffer losses due to misconduct that’s sanctioned in a CIRO enforcement proceeding to make a claim for a share of any money that’s paid in disgorgement — an enforcement remedy that is used to deprive wrongdoers of the proceeds of their violations.
“By requiring individuals and firms to return gains obtained through misconduct, disgorgement is an important deterrence tool and through the development of the program announced today we will be able to help harmed investors as well,” said Andrew Kriegler, president and CEO of CIRO, in a release.
Any investor that suffers direct financial losses due to misconduct that’s sanctioned by CIRO will be able to make a claim for a share of disgorgement money in their case, “provided their losses are directly linked to the misconduct and occurred within the enforcement period.”
The program will not approve claims for opportunity cost, market-driven losses, interest, or non-financial harm. And in certain cases, the SRO may not distribute any money, if the cost of administering claims outweighs the benefit to investors.
While administrative costs will generally be funded by money collected from other sanctions, in certain cases, “where an external process is required, administrative costs may be paid from the disgorged funds,” CIRO noted.
The SRO will announce the details of pending distributions on its website, including deadlines for filing claims, which will generally be 90 days.
Prospective claimants will be asked for certain information to support their claim, including whether they’ve recovered any of their alleged losses from other sources — such as through litigation, or industry dispute resolution processes.
For claims that are denied, there will be a 30-day window to appeal that decision, which will be reconsidered by an independent party. Once the validity of all claims has been determined, payouts of disgorged funds will be made to eligible investors, which will be pro-rated across all valid claims.
The new program follows the adoption of a similar mechanism by the Ontario Securities Commission (OSC) in September 2025. So far, the OSC hasn’t collected, or distributed, any disgorgement money under that program.