Automatically reciprocated orders and settlement agreements

On or after December 4, 2023, if a Canadian securities regulatory authority outside of Ontario imposes sanctions, conditions, restrictions or requirements on you by issuing an order against you, or entering into a settlement agreement with you, that order or settlement agreement now also automatically applies to you in Ontario. You will not receive notice or an opportunity to be heard.  However:

1. The order or agreement only applies to the extent that Ontario’s Capital Markets Tribunal or the Ontario Securities Commission could have imposed similar sanctions, conditions, restrictions or requirements on you under section 127 of the Securities Act (Ontario) or section 60 of the Commodity Futures Act (Ontario).
2. Any monetary or financial sanctions imposed on you in the original (non-Ontario) order or settlement agreement do not apply in Ontario (e.g., administrative penalties or disgorgement orders do not need to be paid again in Ontario).

If the original order or agreement is varied, amended or revoked by the securities regulatory authority that originally made the order or agreement, the variation, amendment or revocation also automatically applies in Ontario.

If you or your lawyer are unclear about how an order or settlement agreement issued against you by another securities regulatory authority in Canada applies to you in Ontario, you can apply for a clarification order from the Capital Markets Tribunal. Similarly, the Commission can also apply for a clarification order. You will receive a copy of the Tribunal’s clarification order, which will also be published on the Tribunal’s website, along with all orders made by the Tribunal itself.

You may be considering investing or partnering or otherwise doing business with a particular individual or company. As part of your research, you may want to see whether individuals or companies have an order issued against them in Ontario or elsewhere in Canada, or whether they entered into a settlement agreement with the Commission or with another securities regulatory authority in Canada. See the sections above to learn when orders and settlement agreements of other Canadian securities regulatory authorities apply in Ontario.

Automatically reciprocated orders and settlement agreements will not appear when you search for orders or settlement agreements on the websites of the Capital Markets Tribunal or the Ontario Securities Commission. Only orders and settlement agreements issued or approved in Ontario by the Capital Markets Tribunal or the Ontario Securities Commission appear on their websites. Instead, automatically reciprocated orders and settlement agreements can be found and accessed on SEDAR+ or the websites of each applicable securities regulatory authority in Canada that issued or approved the originating order or settlement agreement.

The orders and settlement agreements that are automatically reciprocated in Ontario can be found and accessed on the Disciplined List section of the SEDAR+ website. Automatically reciprocated cease trade orders that are issued against reporting issuers, non-reporting issuers and individuals can also be found and accessed on the Cease Trade Orders section of the SEDAR+ website³.

The SEDAR+ website includes a helpful section entitled “FAQs relating to disciplinary actions and Cease Trade Orders (CTOs)” which includes information identifying which jurisdictions automatically reciprocate orders, where a cease trade order has effect, which decisions can be found on the Disciplined List, and other useful information. The Canadian Securities Administrators’ website also has information regarding where cease trade orders have effect.
 

Search tips for finding automatically reciprocated orders and settlement agreements on SEDAR+

The following is a list of non-monetary sanctions that can be automatically reciprocated in Ontario:

1. An order suspending, restricting, or terminating the registration or recognition granted to a person or company under securities or commodity futures law, or an order imposing terms and conditions on their registration or recognition.
2. An order that trading in any securities, derivatives or contracts by a person or company stop, or an order that trading in any securities of a person or company stop (i.e., a cease trade order).
3. An order prohibiting the acquisition of any securities by a particular person or company.
4. An order that any exemptions in securities or commodity futures law do not apply to a person or company.
5. An order requiring a market participant to submit to a review of their practices and procedures and institute such changes as may be ordered.
6. An order that a release, report, preliminary prospectus, prospectus, return, financial statement, information circular, take-over bid circular, issuer bid circular, offering memorandum, proxy solicitation or any other document described in the order:
   1. be provided by a market participant to a person or company,
   2. not be provided by a market participant to a person or company, or
   3. be amended by a market participant to the extent that amendment is practicable.
7. An order that a person or company be reprimanded.
8. An order that a person resign one or more positions that the person holds as a director or officer of an issuer, a registrant (including a dealer or an adviser), or an investment fund manager.
9. An order that a person is prohibited from becoming or acting as a director or officer of an issuer, a registrant (including a dealer or an adviser), or an investment fund manager.
10. An order that a person or company is prohibited from becoming or acting as a registrant (including a dealer or an adviser), an investment fund manager or as a promoter.
11. An order that the acceptance of the form of a contract be revoked.

The above listed sanctions can be found in section 127 of the Securities Act (Ontario) and section 60 of the Commodity Futures Act (Ontario). If a non-monetary sanction in an order or settlement agreement of another securities regulatory authority in Canada does not appear in section 127 of the Securities Act (Ontario) or section 60 of the Commodity Futures Act (Ontario), it will not apply in Ontario (but all other non-monetary sanctions found in that order or settlement agreement will still apply).

As mentioned above, original orders and settlement agreements made by Canadian securities regulatory authorities outside of Ontario will apply in Ontario as if the original order or agreement was made by the Capital Markets Tribunal or the Ontario Securities Commission, with only such modifications as the circumstances require.

The following are common modifications that will apply to (or be read into) the original order or settlement agreement when it becomes automatically effective in Ontario:

• The order or settlement agreement will apply by way of statute (instead of applying as a result of a hearing, proceeding or agreement in Ontario).
  • Accordingly, no separate orders will be made by the Capital Markets Tribunal or the Ontario Securities Commission (and, as such, there will be no Ontario citation for an automatically reciprocated order).
• The Capital Markets Tribunal or the Ontario Securities Commission, as applicable, will be “read in” as the authority that issued the order or agreement (as opposed to the original regulator or tribunal in Canada).
• References to the securities or commodity futures law of the originating Canadian jurisdiction or its securities, derivatives, or commodity futures act and/or provisions of its securities, derivatives or commodity futures act will instead be references to Ontario securities law, Ontario commodity futures law and/or the applicable provisions of the Ontario Securities Act or the Ontario Commodity Futures Act.
• The description of the sanctions may differ slightly depending on the phrasing in, for example, the Ontario Securities Act and the securities act of the originating Canadian jurisdiction.
• References to other legislation, regulations, policies, or procedures specific to the jurisdiction of the originating Canadian regulator will become references to the equivalent Ontario legislation, regulations, policies, or procedures, if applicable.
• References to the originating Canadian jurisdiction will instead become references to Ontario (unless the context requires no change e.g., factual references such as who conducted the original investigation, where a company was incorporated, etc.).
• References to the mandate of the originating Canadian regulator will instead become references to the mandate of the Ontario Securities Commission, as applicable.
• One or more sanctions may not apply in Ontario because the Ontario Securities Act or the Ontario Commodity Futures Act does not have a similar sanction.
• One or more contraventions of securities, derivatives or commodity futures law in the originating Canadian jurisdiction may not apply in Ontario because the Ontario Securities Act or the Ontario Commodity Futures Act does not include a similar contravention.
• No monetary sanctions or disgorgement orders will be reciprocated in Ontario.

Note: Automatic reciprocation will not modify all references to the originating Canadian securities regulatory authorities’ order or settlement agreement. For example,

• Factual references will not change (e.g., if a company was incorporated in a non-Ontario jurisdiction and had its head office in a non-Ontario jurisdiction, those references would not change to Ontario), and
• Any references to repayment of monetary or financial sanctions to the originating Canadian securities regulatory authority would still apply only to that Canadian securities regulatory authority (and would therefore not need to be paid again in Ontario).

¹ Only orders and settlement agreements based on a finding or admission of a contravention of securities or commodity futures law or conduct contrary to the public interest are eligible for automatic reciprocation in Ontario.

² Sanctions, conditions, restrictions or requirements could include, for example, cease trade orders (including failure-to-file cease trade orders and management cease trade orders, as defined in National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions), suspension or revocation of registration, bans on being directors or officers of issuers, reprimands, etc. However, monetary or financial sanctions imposed by the other Canadian securities regulatory authority in the original (non-Ontario) order or settlement agreement are not eligible for automatic reciprocation in Ontario (e.g., administrative penalties or disgorgement orders do not need to be paid again in Ontario).

³ For clarity, orders (including cease trade orders) and settlement agreements made in Ontario by the Capital Markets Tribunal or the Ontario Securities Commission are effective in Ontario without automatic reciprocation. Those orders and agreements, including any variations or revocations, can also be found on the Capital Markets Tribunal website or the Ontario Securities Commission website, depending on whether the Tribunal or Commission made the order or agreement. However, failure-to-file cease trade orders and management cease trade orders (as those terms are defined in National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions) made by the Commission are only available on SEDAR+. The OSC Bulletin also publishes details about orders and settlement agreements made in Ontario (i.e., not automatically reciprocated), including: 

• merits decisions and sanctions and costs orders (under section A.4 – Reasons and Decisions), 
• settlement agreements (under section A.3 – Orders), 
• cease trade orders (under section B.4 – Cease Trade Orders), and 
• certain details about failure-to-file cease trade orders and management cease trade orders (under sections B.4.1, B.4.2 and B.4.3 i.e., issuer name, date of order, date of revocation or lapse date).

⁴ For clarity, the Canadian securities regulatory authorities other than the Ontario Securities Commission are:  

1. Alberta Securities Commission (ASC)
2. Authorité des marchés financiers (AMF)
3. British Columbia Securities Commission (BCSC)
4. Financial and Consumer Affairs Authority of Saskatchewan (FCAA)
5. Financial and Consumer Services Commission (FCNB)
6. Service Newfoundland & Labrador – Office of the Superintendent of Securities (NL-Gov)
7. Manitoba Securities Commission (MSC)
8. Nova Scotia Securities Commission (NSSC)
9. Office of the Superintendent of Securities (NT-Gov)
10. Office of the Superintendent of Securities for Prince Edward Island (PE-Gov)
11. Office of the Superintendent of Securities for Nunavut (NU-Gov)
12. Tribunal administrative des marchés financiers (TMF)
13. Office of the Yukon Superintendent of Securities (YT-Gov)

⁵ Most temporary orders (i.e., orders that will expire if they are not brought back to the decision-maker within a timeframe specified in the order) will not be automatically reciprocated because they are not based on a finding or admission of a contravention of securities or commodity futures law. However, when temporary cease trade orders are based on findings or admissions, they will be automatically reciprocated in Ontario. Accordingly, if you are not searching for cease trade orders, you may want to uncheck the box for “include temporary orders” on the Disciplined List webpage.

⁶ See footnote 4 above for a list of the Canadian securities regulatory authorities other than the Ontario Securities Commission.

⁷ For the reasons set out in footnote 5, if you are searching for cease trade orders on the Disciplined List webpage, you may want to check the box for “include temporary orders”.