Whistleblower protections and significant bounties paid to whistleblowers in the U.S. continue to make headlines, just as issuers in Canada brace for the impact of the OSC’s rollout of its whistleblower program in the coming weeks. Stateside, the SEC announced yet another major award, this time in the amount of $5-million. That announcement followed on the heels of a separate whistleblower-related development at the American securities regulator, as the SEC said that it would award another whistleblower $3.5-million – a reversal of its earlier decision to deny an award to that same whistleblower. Meanwhile, in Ontario, Transparency International Canada (TI Canada) held its annual Day of Dialogue last week, at which whistleblowing issues were a focus. The Day of Dialogue was well-timed given TI Canada’s recent successful intervention at the Supreme Court of Canada in the World Bank Group v. Wallace case, in which TI Canada advocated for whistleblower protections.
Two Major SEC Awards
The recently-announced SEC whistleblower awards in the amount of $5-million and $3.5-million are among the largest awards that the regulator has handed out since it first adopted its bounty-based program in 2011. Over the last five years, the SEC has awarded more than $62-million to 28 whistleblowers, including individual awards totaling $30-million and $14-million.
The announcement of the $3.5-million payout was particularly notable given that the SEC initially denied making an award to this whistleblower earlier this year because the information that the whistleblower provided related to an SEC investigation that was already underway. However, the whistleblower took advantage of the appeal provisions built into the SEC program and challenged the regulator’s initial decision. The SEC reconsidered its original decision, stating: “After careful consideration of the administrative record, including Claimant’s written response and the additional factual information provided by Enforcement staff, we find that Claimant’s information led to successful enforcement because it significantly contributed to the success of the Covered Action.”
Notably, a version of the OSC’s proposed whistleblower program, which had been subject to comment until January 12, 2015, specifically excluded the possibility of reconsideration or appeal. The exclusion of appeal rights in the Ontario policy is noteworthy given that many other aspects of the OSC proposal closely resemble those of the SEC program.
TI Canada held its annual Day of Dialogue on May 10, 2016, with a heavy focus on whistleblower-related issues. TI Canada is a non-governmental organization that promotes anti-corruption practices and transparency in Canada’s governments, businesses and society at large.
During its Day of Dialogue, TI Canada held a session titled “From Outcasts to Bounty Hunters: The Evolving State of Whistleblower Protection in Canada”, with a panel including a representative from the Ontario Securities Commission to discuss the new whistleblower program that is expected to be implemented shortly. The proposed OSC program has attracted and should continue to attract significant interest from Canadian issuers and their directors, legal counsel and compliance officers, given the newly-created risk that employees may be incentivized under the program (once it is in force) to take allegations of wrongdoing at a company directly to the OSC, without first advising internal compliance.
The developments in Ontario come as the Supreme Court of Canada recently issued its decision in the World Bank Group v. Wallace case, in which four whistleblowers had provided information about alleged bribery activities to the World Bank Group. That information was in turn shared with the RCMP and used to obtain wiretaps against former employees of SNC-Lavalin in a prosecution under the Corruption of Foreign Public Officials Act. In a landmark decision that has bolstered the protection of whistleblowers on the international stage, the Supreme Court unanimously overturned the lower court’s decision and ruled that the World Bank Group’s privileges and immunities conferred under Canadian law shield the World Bank Group from having to produce its investigative files to defendants in a Canadian criminal proceeding.