Highlights from CIRO’s 2025–2026 Enforcement Report

On July 22, the Canadian Investment Regulatory Organization (CIRO) released its annual Enforcement Report¹ highlighting its enforcement activities and offering insight into the complaints, investigations, and proceedings over the past year.

What you need to know

• In the past year, CIRO focused on issues of central importance to capital markets regulation and therefore to the securities industry, including (i) the effectiveness of dealer supervision and internal controls, and (ii) the obligation for registrants to act as gatekeepers to the capital markets. This signals that registrants can expect heightened scrutiny in the years ahead when it comes to supervisory systems and the performance of gatekeeper duties.
• While CIRO’s overall activity levels (measured by the number of cases reported) were lower than last year, CIRO imposed more significant sanctions, totalling over $15 million. This suggests that CIRO is demanding higher sanctions from registrants on matters involving significant investor harm, market integrity concerns, and supervisory issues.
• CIRO continues to prioritize seeking disgorgement orders, which have increased almost seven-fold since last year.

Reduced enforcement activity, but increased penalties

The enforcement statistics show slightly lower activity levels as compared to last year:

• Investigations and enforcement proceedings. In FY26, CIRO completed fewer investigations (151 compared to 176 in FY25), commenced fewer enforcement proceedings (45 compared to 49 in FY25), and concluded fewer proceedings (48 compared to 57 in FY25).
• Penalties. Despite the reduction in volume, CIRO imposed more significant sanctions, totaling more than $15 million in FY26 (compared to $10.3 million in FY25). There was a particularly sharp increase in sanctions imposed against dealer member firms (as distinct from individual registrants), rising from $3.1 million in FY25 to $8.7 million in FY26.

These figures suggest that CIRO is pursuing a more targeted enforcement strategy. Rather than focusing on high volumes of technical violations, CIRO appears to be directing its resources toward matters that the regulator views as justifying more significant sanctions, such as matters involving significant investor harm, market integrity concerns, and systemic compliance failures.

Focus on supervisory systems and gatekeeper functions

In FY26, CIRO focused on issues of central importance to the securities industry, namely: (i) the effectiveness of supervision and internal controls, and (ii) the obligation for registrants to act as gatekeepers to the capital markets. CIRO’s focus on these issues means that registrants can expect heightened scrutiny of (i) firms’ supervisory systems, including the mechanisms to prevent, detect, and investigate potential non-compliance, and (ii) the performance of gatekeeper duties, including the steps taken to investigate and address warning signs.

• Supervisory systems. CIRO focused on the effectiveness of firms’ supervisory systems and internal controls. The Report highlights cases where firms failed to prevent, detect, or investigate potential concerns, which reflects an increasing concern about identifying and addressing misconduct before investors suffer harm. This focus is reflected in the enforcement statistics: supervision was the most common firm-level regulatory violation in FY26, appearing in six concluded proceedings.
• Gatekeeper duties. CIRO focused on ensuring that registrants perform their role as gatekeepers in the capital markets. The cases highlighted in the Report underscore the regulatory expectation that registrants must do more than react to known misconduct: they must take reasonable steps to investigate and address warning signs that prompt further scrutiny. The reported cases demonstrate that firms and registrants are expected to respond appropriately to red flags, make reasonable inquiries, and take steps based on the information available to them. This development aligns with similar decisions of securities commissions (see our bulletin on the BC Securities Commission’s review in 2025 of a CIRO decision on gatekeeper obligations, “Gatekeeper obligations expansively interpreted”).

In addition to these issues, when it comes to registered individuals, CIRO continued to focus on the requirement for registrants to deal with their clients honestly and fairly, and observe high standards of business conduct to maintain investor confidence in securities markets. In FY26, conduct involving inappropriate personal financial dealings, outside activities, and standards of conduct were among the top three violations in concluded proceedings against registered individuals.

CIRO’s new Disgorgement Distribution Program

The Report highlighted CIRO’s new Disgorgement Distribution Program, which was launched on April 1, 2026. The program is designed to distribute disgorged funds to investors who have suffered direct financial loss. While monetary penalties remain an important deterrent, CIRO is increasingly focused on disgorgement orders as a means to remove incentives for non-compliance by depriving wrongdoers of the financial benefits gained through misconduct. While the use of disgorgement orders is not new, CIRO’s new distribution program allows it to continue prioritizing disgorgement while also providing compensation directly to harmed investors.

The increasing focus on disgorgement orders is reflected in the enforcement statistics: in FY26, CIRO ordered approximately $4.3 million in disgorgement against dealer-member firms, which is close to seven times the amount of $623,925 ordered in FY25.

Improving regulatory technology

CIRO is continuing to evolve into a more integrated and data-driven regulator. With the operational integration of the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada largely complete, the Report highlights CIRO’s focus on harmonizing systems, policies, and processes across its regulatory framework. For example, during FY26, CIRO transitioned to a consolidated set of enforcement policies and procedures, and published a document production guide to assist firms and individuals in responding to enforcement requests.