On February 3, 2015, the OSC released OSC Staff Consultation Paper 15-401, which proposes a framework for a new whistleblower program (the “Whistleblower Program”) for reporting serious misconduct of Ontario securities law to the OSC. The Whistleblower Program is the first of its kind for securities regulators in Canada and is intended to identify possible breaches of securities law that may not otherwise come to the attention of the OSC. It is one of a number of OSC initiatives designed at resolving enforcement matters more quickly and effectively and is also aimed at motivating issuers and registrants to self-report any instances of misconduct.
Pursuant to the Whistleblower Program, an employee or individual with credible concerns would be eligible to receive a financial award of up to 15% of the total monetary sanctions (up to a total of $1.5 million), provided the information was provided voluntarily, was of high quality and was original in nature (i.e. that the OSC is not already aware of). The payment would be awarded upon the final resolution of certain significant administrative enforcement matters and only in instances where monetary sanctions or settlement payments exceed $1 million.
To ensure the success of the Whistleblower Program, the OSC intends to use all reasonable efforts to keep a whistleblower’s identity confidential, subject to the following exceptions: (i) when disclosure is required to be made to a respondent in connection with certain administrative proceedings to permit such respondent to make a full answer and defence; (ii) when the relevant information is necessary to make the OSC’s case against a respondent; and (iii) when the OSC provides such information to another regulatory authority or agency pursuant to the Securities Act (Ontario) (the “Act”).
The OSC intends to request the addition of three provisions to the Act to protect whistleblowers from retaliation by employers. These provisions would (i) make it a violation of securities laws to retaliate against a whistleblower; (ii) provide whistleblowers with a civil right of action against an employer who violates the anti-retaliation provision; and (iii) render contractual provisions designed to silence a whistleblower unenforceable.
The OSC is seeking public comment from investors, market participants and the securities litigation bar until May 4, 2015 and intends to host a roundtable during the comment period in order to encourage further discussion. Details on the roundtable are expected to be announced by the OSC shortly.