Understanding OSC’s Whistleblower Program

Earlier this summer, the Ontario Securities Commission (“OSC”) launched a new whistleblower program aimed at encouraging individuals to report securities-related misconduct, such as market manipulation, insider trading, irregularities in the areas of financial reporting and general misrepresentation to the OSC.

The program is similar to one currently in effect in Quebec, but unlike the Quebec program, the new OSC whistleblower program is offering a financial incentive. The money is in the form of a whistleblower award, which can top $5 million for verified tips that result in penalties totaling a minimum of $1 million.

Purpose of Whistleblower Program

The primary objective of the OSC’s whistleblower program is to provide motivation for individuals with insider information or knowledge about potential breaches of securities law to report this information to the OSC. It also hopes that the whistleblower program can increase not only the number of complex securities law cases but the effectiveness of those cases investigated and brought forward.

Eligibility Requirements

Whistleblowers must provide “high-quality” and “original information” voluntarily. The report must contain “sufficiently timely, specific and credible facts” that relate to alleged violations of Ontario securities law. The information must provide “meaningful” assistance and benefit the OSC staff.

Not all whistleblowers are eligible, however. In the following situations, individuals are ineligible to receive financial remuneration for the information they provide. If an individual:

  • fails to cooperate with the OSC following their initial provision of information;
  • was an officer or director of the company or organization in question; or
  • obtains the information by way of providing legal, assurance or auditing services.

Protection for Whistleblowers

The OSC amended the whistleblower program to provide protection to individuals against reprisals, including broad prohibitions on reprisals against former or current employees who provide information they feel is contrary to the regulations for the following:

  • Any law enforcement agency
  • Any recognized self-regulating organization
  • The Ontario Securities Commission

The prohibitions on reprisals would:

  • make retaliation against a whistleblower a violation of securities law;
  • enable an individual providing information the ability to take a civil right of action against any employer in violation of the anti-retaliation provision; and
  • nullify and render unenforceable any and all contractual provisions designed to deter or silence whistleblowers.

Anonymous Reporting

The OSC’s new whistleblower programs allow for individuals to anonymously submit information when they have legal representation, provided their lawyer submits the necessary declarations. It is worth noting, however, that to collect a reward for the information provided, an individual anonymously providing the information will be required to confirm their identity.

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