Cease trade and freeze orders
The Capital Markets Tribunal and the Ontario Securities Commission (OSC) have the authority to issue cease trade orders (CTOs) and the OSC has the authority to obtain freeze directions against individuals or companies.
Under Ontario’s Securities Act and Commodity Futures Act cease trade orders issued by other Canadian securities regulatory authorities are automatically reciprocated in Ontario as if they were made by the Capital Markets Tribunal or the OSC themselves. Visit the automatically reciprocated orders and settlement agreements section of this website to find information on, and to access, these orders.
Cease trade orders
Once issued, a CTO prohibits or limits trading in securities. CTOs may be issued for a variety of durations. Temporary CTOs are those with an expiry date, whereas permanent CTOs remain in effect indefinitely until revoked by the OSC.
The Canadian Securities Administrators use SEDAR+ to provide information on individuals and companies that are, or previously were, the subject of a CTO.“
Due to the automatic reciprocation order provisions in Ontario’s Securities Act and Commodity Futures Act, any cease trade orders that are found on SEDAR+ – whether imposed by the OSC, the Capital Markets Tribunal, or other Canadian securities regulatory authorities (for the latter, only on or after the effective date of the automatic reciprocal order legislation in Ontario) – apply in Ontario as if they were made by the Capital Markets Tribunal or OSC themselves. Visit the automatically reciprocated orders and settlement agreements section of this website to find information on, and to access, these orders.
Changes to the Act in 2014 simplified the process for the OSC to secure court orders to prevent a person or company from liquidating or transferring funds held in bank or brokerage accounts. Subsection 126(1) of the Act allows for the interim preservation of property, also known as a freeze direction or freeze order.
As part of issuing a freeze order , the OSC may:
- direct a person or company to retain any funds, securities or property in its possession, control or safekeeping until the OSC revokes the order, consents to the release or the Superior Court of Justice orders otherwise
- order that the freeze direction be certified to a land registrar or mining recorder which will have the same effect as a certificate of pending litigation
A freeze direction that names a bank or financial institution will apply only to the branch(es) identified in the direction.
The freeze direction can be issued without notice but copies of the direction must be provided to the persons and companies named in the direction. Any person or company directly affected by a freeze direction may apply to the OSC for clarification or to have the direction varied or revoked.
Freeze orders are an important tool to secure restitution for victims because they can be used in the early stages of an investigation and recovered money can be returned to victims under a court-ordered receivership process.
Please note: unless specifically included in the freeze direction, funds, securities or property in a recognized clearing agency or securities in the process of transfer by a transfer agent are excluded. Also, funds that have already been spent or hidden before the OSC begins its investigation cannot be recouped later. Funds that have already been spent or hidden before the OSC begins its investigation may not be recoverable.