The Ontario Securities Commission (OSC) has formally released for public comment its controversial policy on whistleblowing, which is intended to encourage the reporting of serious misconduct to the OSC. The first of its kind in Canada, the program could award a whistleblower up to $5 million upon the final resolution of an administrative enforcement matter that generates at least $1 million in monetary penalties or voluntary payments to the OSC.
The program was initially proposed for public comment in OSC Staff Consultation Paper 15-401 in February 2015. Staff at the OSC later held a public Whistleblower Roundtable on June 9, 2015. While commentators were largely supportive of the goals of the program, the comments showed considerable concern over its potential to undermine firms’ internal compliance efforts and to create conflicting incentives for employees.
The $1.5 million cap on financial incentives also received mixed reviews, with one commentator stating that it is inappropriate in the Canadian context given the relatively small size of the markets, while others noted that the cap is too low to provide sufficient incentive for whistleblowers to come forward.
In response to the comments, the proposed policy reflects changes to certain aspects of the program. For example, the proposed policy:
- contains provisions which are intended to encourage whistleblowers who are employees to report potential violations of Ontario securities law in accordance with their employer’s internal compliance protocols (note, however, that internal reporting is not a prerequisite to collecting a whistleblower award)
- allows a greater category of individuals (including auditors, CCOs, officers, directors, in-house counsel and culpable whistleblowers) to collect a whistleblower award in certain limited circumstances
- allows whistleblowers to collect between 5% and 15% of the sanctions collected by the OSC, up to a limit of $5 million
Comments on the proposed policy are due by January 12, 2016.