Recent decisions by financial-sector regulators raise a significant question for Canadian investors and markets: Is there value in offering rewards to encourage whistleblowers to step forward?
Both the Ontario Securities Commission (OSC) and the Autorité des marchés financiers (AMF) looked at the same evidence — primarily the whistleblower reward programs in the United States — and reached opposite conclusions.
OSC saw the significant assistance that whistleblowers in the U.S. have provided to expose and stop corporate wrongdoing, and decided to offer monetary rewards as the U.S. programs do, recognizing that blowing the whistle can cost people their livelihoods and that rewards are essential to a successful whistleblower program. This is particularly true for attracting high-level insiders with detailed information about corporate fraud.
In contrast, AMF decided against offering whistleblowers rewards, basing its decision on an internal study concluding that "it cannot be established with certainty ... that a financial incentive generates more quality whistleblowing."
Quebec's failure to adopt financial incentives will deter potential whistleblowers and make it more difficult for the AMF to enforce Quebec's laws. Investors and markets will be the losers.
The link to the full commentary published in the Montreal Gazette can be found Here.
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