Canada: Incentivizing Reports Of Misconduct: The OSC Proposes New Whistleblower Program

Last Updated: February 18 2015
Article by Philippe Tardif, Laura Paglia, Rebecca A. Cowdery and Andrew McLean

Most Read Contributor in Canada, November 2017

Citing the success of the Dodd-Frank Whistleblower Program which has operated since 2011 in the United States, the Ontario Securities Commission (the OSC) has proposed a new Whistleblower Program that would reward eligible whistleblowers with up to $1.5 million for information which leads to the prosecution of a serious financial crime. The OSC's Staff Consultation Paper 15-401 - Proposed Framework for an OSC Whistleblower Program [available here] released for comment on February 3, 2015, describes a program that, if successful, would be the first whistleblower program by a Canadian securities regulator to offer a financial incentive to tipsters for potential information.

The principal objective of the OSC's Whistleblower Program is to motivate individuals with inside knowledge or information that relates to a possible serious breach of securities law to come forward and share that information with the OSC. It is thought that such information might otherwise be impossible for the OSC to obtain on a timely basis. The OSC also hopes to increase the number of complex securities enforcement cases brought forward and the efficiency of prosecutions through high quality information. Lastly, it is anticipated that an incentive based Whistleblower Program might motivate issuers and registrants to self-report misconduct so that they may avail themselves of the OSC's credit for cooperation program. A market participant who is aware of misconduct will not receive "credit for cooperation" if the misconduct is first reported by the whistleblower instead.

The Whistleblower Program largely mirrors the Dodd-Frank Whistleblower Program operated by the U.S. Securities and Exchange Commission (the SEC). The SEC Whistleblower Program has been viewed as generally successful and has resulted in over 10,000 tips since its inception, with awards paid out to fourteen whistleblowers, including a record $30 million award paid to a whistleblower in September 2014.

The OSC's Whistleblower Program would be operated as a separate unit with the OSC's Enforcement Branch similar to the SEC's Office of the Whistleblower, which is also housed within the SEC's Division of Enforcement.

Paying the Whistleblower

The OSC proposes to offer an eligible whistleblower a financial award of up to 15% of the total monetary sanctions awarded in an OSC hearing or settlement in which the total sanctions or settlement exceeds $1 million. Payouts under the Whistleblower Program would be capped at $1.5 million and would not be paid until the end of all proceedings (including appeals). Moreover, the determination of the amount of a whistleblower award would be discretionary and based on a number of factors, including how cooperative the whistleblower was during the course of the investigation and the extent to which the information contributed by the whistleblower had a meaningful impact on the investigation and outcome.

The size of potential rewards under the Whistleblower Program is markedly less than the SEC Whistleblower Program which may pay whistleblowers up to 30% of monies collected through sanctions. Moreover, unlike the SEC Whistleblower Program, whistleblowers will not be provided an avenue of appeal should the OSC decline to offer an award.

A further key distinction from the SEC Whistleblower Program is that whistleblower awards would not be contingent on the successful collection of sanctions. Awards would be funded by the OSC through the funds that are collected through administrative penalties, disgorgement, and settlements that are not otherwise paid back to victims.

The (In)Eligible Whistleblower

The OSC's proposed Whistleblower Program would not pay out to all tipsters who provide information to the OSC. The information provided by an eligible whistleblower must be of high quality, original and provided on a voluntary basis. Furthermore, the OSC may deny whistleblowers a financial reward in several circumstances, including:

  • the whistleblower is employed as the chief compliance officer of a registrant or is a director or officer of a reporting issuer and obtained the information as a result of the organization's internal reporting or investigation process;
  • the information is subject to solicitor-client privilege;
  • the information proves misleading, untrue or lacks specificity; or
  • the whistleblower obtained the information in circumstances which would bring the administration of the OSC Whistleblower Program into disrepute.

In addition to the above, the OSC may exclude a whistleblower who has "culpability" in the conduct being reported from qualifying as an eligible whistleblower. The level of culpability would be considered in determining whether a whistleblower award is made to the individual and the amount of the award. Significantly, the OSC retains the right to take an enforcement action against the whistleblower for his or her role in the conduct.

The OSC does not propose to require that a whistleblower report any misconduct to compliance personnel of a registrant or other applicable resources within a reporting issuer. The OSC suggests that the Whistleblower Program would "encourage" whistleblowers to report misconduct internally as a first step, but the Whistleblower Program would be available as an avenue for individuals to report misconduct where the individual considers the internal reporting mechanisms to be defective or where he or she fears retaliation as a result of raising concerns using the internal processes.

Confidentiality and Protecting the Whistleblower

The OSC promises that the Whistleblower Program will include a requirement for the OSC to take "reasonable efforts" to protect the identity of the whistleblower. This would include generally not expecting or requiring the whistleblower to testify at any administrative hearing, although there are noted exceptions to this provision. The Whistleblower Program may allow the whistleblower to remain anonymous by providing information to the Commission through his or her lawyers, although the OSC will only make an award to the whistleblower once he or she identifies him/herself.

In addition to protecting confidentiality, the OSC suggests that the Securities Act (Ontario) would need to be amended to make it a violation of securities law to retaliate against a whistleblower. Contractual agreements designed to silence whistleblowers would be unenforceable to the extent required to allow the whistleblower to provide information to the Commission. The Act would also be amended to provide whistleblowers a civil right of action against employers who violate the anti-retaliation provisions. These provisions exist in other provincial securities legislation and are also proposed in the Provincial Capital Markets Act (released for comment in August 2014) in conjunction with the Cooperative Capital Markets Regulatory System.

Lastly, to maintain confidentiality and to ensure whistleblowers are dealt with in accordance with the terms of the Whistleblower Program, the OSC proposal contemplates setting up a separate unit within the Enforcement Branch to deal with whistleblower submissions and the administration of the Whistleblower Program.

Providing Comments to the OSC on the Whistleblower Program

Throughout the Consultation Paper, the OSC request feedback on specific questions posed. Perhaps the most significant issue is the impact of the Whistleblower Program on the internal compliance systems of registrants and reporting issuers. Will the Whistleblower Program incentivize individuals to circumvent the organization's internal reporting processes in order to gain financial awards from the OSC? The Whistleblower Program seeks to encourage would-be whistleblowers to first report their concerns internally by having staff take this factor into account when contemplating eligibility for an award as well as the amount of the award. Furthermore, the OSC contends that allowing whistleblowers to report directly to the OSC may encourage market participants to self-report inappropriate conduct as soon as they become aware of such misconduct, and in any event, in advance of any whistleblower that had previously reported the misconduct internally. The OSC will generally give a market participant no "credit for cooperation" if the misconduct is reported first by a whistleblower, rather than the market participant itself, if the market participant was aware of the misconduct.

Comments are due on the Consultation Paper by May 4, 2015. The OSC notes that staff intend to host a roundtable during the comment period in order to encourage further discussion.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions