OSC publishes whistleblower policy for comment

October 29, 2015

Yesterday, the Ontario Securities Commission (OSC) published for comment its proposed OSC Policy 15-601 Whistleblower Program (the Proposed Policy), which is intended to encourage individuals to report information on serious securities- or derivatives-related misconduct to the OSC.

Under the Proposed Policy, whistleblowers who meet certain eligibility criteria and who voluntarily submit information to the OSC regarding a breach of Ontario securities law may be eligible for a monetary award if it is determined that the information they provided meaningfully aided the OSC in its investigation of the matter and in obtaining an order imposing monetary sanctions and/or the making of a voluntary payment of $1 million or more. 

The Proposed Policy provides for a maximum monetary award of up to $5 million, being significantly greater than the maximum award of $1.5 million proposed under OSC Staff Consultation Paper 15-401 Proposed Framework for an OSC Whistleblower Program.  However, the potential $5 million monetary award is reserved for cases in which the OSC actually collects monetary sanctions and/or voluntary payments equal to or in excess of $10 million and is subject to certain other conditions.  If the monetary sanctions and/or voluntary payments are equal to or in excess of $10 million, but the OSC does not actually collect an amount equal to or greater than $10 million, the monetary award will be limited to a maximum of $1.5 million. Otherwise, the OSC has indicated that it will pay an eligible whistleblower a monetary award on a scale of between 5% and 15% of the total monetary sanctions imposed and/or voluntary payments made where the aggregate monetary sanctions imposed and/or voluntary payments made are equal to or in excess of $1 million. Under the Proposed Policy, the OSC has discretion to increase or decrease the percentage of the whistleblower award based on its analysis of various factors, including the significance of the information, degree of assistance and remediation and recovery, among others.

The Proposed Policy requires the OSC to take all reasonable efforts to keep the identity of a whistleblower, including information that could be reasonably expected to reveal the whistleblower’s identity, confidential.  The OSC has further indicated that it will recommend that any requests for disclosure under freedom of information legislation be denied if such requests could reasonably result in the disclosure of the identity of the whistleblower.  The Proposed Policy also contains anti-retaliation protection, which is intended to protect bona fide whistleblowers from retaliation from their employers and permits whistleblowers to report purported violations of Ontario securities law anonymously through their legal counsel. While the OSC encourages the reporting of potential breaches of Ontario securities law through internal compliance and similar reporting mechanisms, whistleblowers are not required to do so prior to reporting such a breach to the OSC pursuant to the Proposed Policy. 

The Proposed Policy, which is the first of its kind in Canada, follows OSC Staff Consultation Paper 15-401 Proposed Framework for an OSC Whistleblower Program which was published on February 3, 2015.  The OSC will be accepting comments on the Proposed Policy until January 12, 2016.

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