On August 21, 2025, the Canadian Investment Regulatory Organization (CIRO) launched a consultation entitled Disgorgement – Proposed Amendments to the Mutual Fund Dealer Rules. The proposed amendment aims to make it possible to distribute to harmed investors the amounts disgorged to CIRO in disciplinary proceedings. 

However, CIRO states on the consultation website that the rules on mutual fund dealers do not explicitly provide for disgorgement. It therefore proposes to amend section 7.4.1. of the Mutual Fund Dealer (MFD) Rules to specifically provide for disgorgement. 

This would bring them in line with the Investment Dealer and Partially Consolidated (IDPC) Rules, which explicitly provide for disgorgement. 

Thus, the amendment would insert the phrase "disgorgement of any amount obtained, including any loss avoided, as a result of committing the violation" among the sanctions that a hearing panel may impose, among others, on an approved person (7.4.1.1) or a mutual fund dealer member (7.4.1.2). 

Briefs must reach CIRO no later than September 22. CIRO will make them public. 

Act without delay 

This is not the first time the self-regulatory organization (SRO) has addressed this issue. On February 1, 2023, CIRO reiterated in a draft regulation that it was unable to distribute the amounts disgorged to it to harmed investors. This is the draft regulation entitled Distributing Funds Disgorged and Collected through New SRO Disciplinary Proceedings to Harmed Investors. 

Under its previous name, the New Self-Regulatory Organization of Canada, CIRO began operations on January 3, 2023, following the merger of the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada. 

Submitted a second time without amendments on October 21, 2024, this proposal revisited, among other things, a question raised during the first consultation on the distribution of disgorged amounts. "All commenters who responded to this question agreed that the Disgorgement Distribution Proposal should apply to all CIRO Dealer Members," reports CIRO, adding that one commenter called for expedited implementation regarding disgorgement. 

In light of these comments, CIRO states that it intends to implement its Disgorgement Distribution Proposal in 2026, rather than awaiting the finalization and implementation of the proposed CIRO Rules. 

The Rule Consolidation Project – Phase 5 was submitted for consultation on March 27 and closed on June 25. CIRO received 23 submissions during the consultation period. The project aims to consolidate the two sets of rules governing investment dealers and mutual fund dealers into a single set of rules. 

Clarity and Predictability 

On the consultation section of its website, CIRO adds that its proposed amendment "will result in added clarity and predictability of CIRO’s requirements as they apply to Mutual Fund Dealer Members and their Approved Persons. 

CIRO does not anticipate that the proposal will result in significant incremental cost to itself, its Dealer Members, or their clients, "as this amendment merely clarifies that CIRO’s current practices regarding disgorgement."