Companies and regulators alike are increasingly recognizing that “whistleblowers”, i.e., individuals who report suspected wrongdoing, mismanagement or unethical conduct, are an important resource for managing risk and responding to conduct that can harm companies, their stakeholders and the public at large. The CSA Group (formerly the Canadian Standards Association) established a diverse working group drawn from the business community, academics, investigators, lawyers and former whistleblowers to develop Whistleblowing Systems – A Guide. This document provides guidance for organizations of all sizes to design and implement an effective system to empower individuals to report potential problems and enable management to respond when concerns are raised.
Whistleblowing Systems – A Guide is the first such guideline published for the Canadian context. It provides background about the existing landscape of whistleblower protection in Canada, as well as practical advice to help organizations determine what an effective system might be for its size and context. The Guideline discusses the benefits of whistleblowing systems, as well as key planning considerations, critical components, implementation recommendations, and target outcomes for a successful system.
Interest in whistleblower policies has intensified in recent years, in particular as regulators and companies debate the relative merit of encouraging individuals to report internally within a company rather than taking concerns directly to law enforcement. While recognizing that there may be circumstances in which it is necessary to go directly to law enforcement, having an effective system that enables whistleblowers to report internally without fear of retaliation or reprisal is an important way companies can encourage individuals to report potential concerns internally so that companies have an early opportunity to address risk or potential misconduct.
In the US, the 2010 Dodd Frank Wall Street Reform and Consumer Protection Act brought whistleblowing to prominence in two important ways. First, it introduced monetary incentives or bounties for individuals who report possible violations of federal securities law to the US Securities and Exchange Commission (SEC). Second, it gave the SEC jurisdiction to bring enforcement actions against companies that retaliate against employees who report wrongdoing to the agency. The SEC settled its first whistleblower anti-retaliation case with hedge fund Paradigm Capital in 2014.
In 2015, the Ontario Securities Commission (OSC) became the first regulator in Canada to announce a whistleblowing program. Under the proposed OSC Policy 15-601 Whistleblower Program, a whistleblower could be awarded up to CAD$5 million for voluntarily providing information that meaningfully assists the OSC in specific proceedings under the Securities Act or Commodity Futures Act. Subject to the consultation process that concluded in January 2016, the OSC is aiming to have the program in place by Spring 2016.
These developments underscore the importance of companies getting ahead of the curve and designing effective whistleblowing systems to ensure that individuals with information about risk or potential misconduct have safe and trustworthy mechanisms to report information internally.
The Guideline is currently free for download through the CSA Group Communities website.