The first ever paid whistleblower program backed by a Canadian securities regulator was launched by the Ontario Securities Commission (OSC) recently.
Ontario’s New Office of the Whistleblower
An up to $5 million offer awaits those who will turn in tips and reports of fraud to Ontario’s new Office of the Whistleblower. Anyone who has information on disclosure violations, market manipulation, and illegal insider trading can contact authorities to report such data. In instances where sanctions are imposed, whistleblowers can be awarded with up to $1.5 million.
All of the above is meant to change people’s perception of whistleblowing. Whistleblowers stand to lose their jobs and possibly get personal threats because of their role in exposing a misconduct.
Mixed Reaction About the New Program
Office of the Whistleblower in Toronto chief Kelly Gorman says that whistleblowers need to know that they will be protected should they choose to come in the open regarding some shady activities. She added that this is not only going to be an absolute game changer for law enforcers, this can also protect Ontario investors more.
Toronto law firm Fasken Martineau senior partner Norm Keith begs to differ. He says that the program may not receive the expected level of success because he does not believe that an “American-style bounty hunter” approach is going to work in Canada.
In the US, the Office of the Whistleblower in their Securities and Exchange Commission rewards tipsters with 10 to 30% of the money collected from viable leads, viable leads described as those that provided information that caused a SEC enforcement action in which sanctions of more than US$1 million has been ordered.
Keith added that in Canada, there is no tradition of holding alleged wrongdoers accountable. He also shared his sentiments about the $5 million ceiling for rewards as too small. He further said that the OSC has a poor track record for prosecuting those involved in securities fraud such as insider trading and because of this, he is thinking that the chances of a tip being used to pursue a hearing to penalize perpetrators are cute low.
As for Gorman, she says that the program will enhance OSC’s ability to achieve better outcomes for Canadian markets as far as identifying and pursuing any securities violations This can also help the OSC protect investors. She further added that previously handled cases had favourable outcomes, with voluntary payments made to the OSC once a case has been identified.
How ‘Rewarding’ Will This Be for Whistleblowers?
A whistleblower can be an awarded only when a tip is deemed eligible for the reward. To qualify as such, information provided must lead to voluntary payments or settlements of more than $1 million. Gorman added that a whistleblower is eligible of 5% to 15% of whatever exceeds $1 million. The percentage of the payout will be determined by a number of factors, including if a whistleblower is involved in the case (or not), in which case the percentage would be on the lower end.
Keith expressed that he finds it disturbing that a co-conspirator can easily be rewarded under the OSC policy. If something goes wrong in a deal, a co-criminal, co-accused, or co-conspirator can simply turn in the other party and still be monetarily rewarded. Keith expressed that this is against the Anglo-Canadian tradition and common law that no one should gain profit from committing a crime.
Gorman responded that depending on how involved a whistleblower is, he or she can also be made to answer to the law. With this said, she added that part of the enhanced protection of the new policy is allowing anonymous tips from whistleblowers.
Want to know more about how having a whistleblower program could benefit your organization? Contact us at Haywood Hunt today for your obligation-free initial consultation. We’ll help you find out more details about how private investigators can help you with your whistleblower program.