Au cours de l’été 2016, nous avons discuté du lancement de deux programmes de dénonciation par la Commission des valeurs mobilières de l’Ontario (CVMO) et l’Autorité des marchés financiers du Québec (AMF). Même si les deux programmes visent à encourager le signalement d’irrégularités dans le domaine des valeurs mobilières, chaque organisme a adopté une approche différente en ce qui concerne l’utilisation d’incitatifs.

Par ailleurs, comme il est indiqué à la fin du présent billet, le gouvernement du Québec a récemment déposé devant l’Assemblée nationale un projet de loi en vue d’ajouter des mesures anti-représailles à son programme de dénonciation.

Une traduction de ce billet sera disponible sous peu.

In the summer of 2016, we reported on the launch of two whistleblower programs initiated by the Ontario Securities Commission (OSC) and Quebec’s Autorité des marchés financiers (AMF). While both programs are aimed at encouraging individuals to report securities related misconduct, the regulators adopted diverging approaches in relation to incentivization.

In a related development discussed at the end of this post, the Government of Quebec has recently introduced a Bill in the National Assembly that would add anti-retaliation provisions to the province’s whistleblower law.

Two Approaches to Whistleblowing

While the program adopted by the OSC incentivizes reports of misconduct by offering monetary awards to whistleblowers meeting certain eligibility criteria, the AMF refused to offer financial awards, arguing that the protection of confidentiality – and not the prospect of financial rewards – is what primarily motivates whistleblowers to report incidents. The discrepancy between the two models raised the question of whether payment is the key to a successful whistleblower program. As we move forward, the experiences of Canada’s two largest jurisdictions will offer an interesting “test case” of whistleblower incentives.

The OSC/SEC approach: offering monetary incentives

The U.S. Securities and Exchange Commission has had a reward-based whistleblower program since 2010 and recently announced that since the inception of its program, more than US$162 million has been awarded to 47 whistleblowers who voluntarily provided the SEC with original and useful information that led to successful enforcement actions.

The OSC program, in part inspired by the U.S. model, also generated promising results. Shortly after its summer 2016 launch, the CBC (citing OSC chair Maureen Jensen) revealed that in a period of approximately three months the OSC program had received more than 30 tips of securities law violations. The Ontario regulator’s mimicking of the reward-based model seemed to deliver the anticipated results.

The AMF/UK/Australian approach: no monetary incentives

However, the Montréal newspaper Le Devoir (citing AMF officials) recently reported that the AMF received 68 reports of securities-related misconduct between June 2016 and August 2017, more than half of which have resulted in a new investigation or added new elements to an existing investigation. It therefore appears that the absence of financial rewards under the AMF program did not slow down Quebec whistleblowers. The Quebec approach’s relative success, inspired by the non-rewards whistleblower programs offered by the U.K. Financial Conduct Authority and the Australian Securities and Investments Commission, seems to support the AMF’s contention that financial incentives do not generate more whistleblowing and that the protection of confidentiality and the existence of anti-retaliation measures are what really matter to potential whistleblowers.

The Answer: Too Early To Tell

Despite this potential similarity and the satisfactory quantitative results produced by both models, the relative success of each program remains hard to determine at this relatively early point.

To date, it appears that the lack of financial awards has not negatively affected the AMF whistleblower program. Beyond the total number of received reports however, it is possible that financial incentives have a qualitative impact on whistleblower disclosures. Only when we have data on the quality of the received tips and the likelihood of these tips to result in actual proceedings, will we be able to accurately appreciate the value of each model.

In any event, the AMF program’s early success will certainly comfort the Alberta Securities Commission, who announced earlier this year that it was exploring the creation of a whistleblower program but ruled out offering financial incentives to whistleblowers, that it made the right decision.

Postscript: Quebec Unveils New Whistleblower Anti-Retaliation Provisions

In a related development, the Government of Quebec recently introduced Bill 141 which (among other things) would amend the Quebec Securities Act to introduce anti-retaliation measures expressly forbidding all forms of reprisal and threats of reprisal against a person disclosing securities-related misconduct to the AMF. This measure, expected to be adopted in the Spring of 2018, will bring the Quebec securities legislation into closer alignment with Ontario’s (which was amended to include such anti-retaliation measures over a year ago), and would realize an important element of the AMF’s anti-whistleblower plan as originally announced.