Canada: OSC Hopes To Ramp Up Enforcement Efforts With Whistleblower Program

The Ontario Securities Commission (OSC) recently announced that it will be hosting a roundtable to explore the issues raised in its proposal to implement a whistleblower program. The OSC first published details of the proposed program (the Program) under Consultation Paper 15-401 Proposed Framework for an OSC Whistleblower Program, (the Paper), which outlines the main components of the program, how OSC staff envision it would work, as well as possible issues raised.

The Program is intended to encourage individuals to report breaches of Ontario securities laws and would provide an incentive of up to 15% of the total monetary sanctions imposed on wrongdoers (up to a maximum of $1.5 million) to eligible whistleblowers who provided the OSC with information that leads to administrative proceedings resulting in sanctions of more than $1 million. The Program would also protect whistleblower confidentiality and include anti-retaliation measures to deter employers from acting against employees.

Eligibility of Whistleblower

Under the proposal, the program would be restricted to individuals and require whistleblowers to provide information that meets certain criteria, including that it is timely, credible and related to serious misconduct in the marketplace. Misconduct that could qualify includes cases involving misleading financial statements, market manipulation, illegal distributions and unregistered sales of securities, registrant misconduct and insider trading, tipping or selective disclosure.

Certain individuals, however, would not qualify for the program, including directors, officers and Chief Compliance Officers (or equivalent) who acquired the information as a result of an organization's internal reporting or investigation processes.

Individuals who participated in the misconduct could be eligible for the Program, depending on the particular circumstances of the case. However, amnesty is not currently being considered and, while leniency may be afforded, at this stage it is proposed that staff would still consider enforcement against the whistleblower for the misconduct. The level of culpability would also be a relevant consideration in determining whether to make a whistleblower award and the amount of the award.

Potential sources include employees of a market participant, as well as individuals who uncover possible misconduct by a market participant through their own independent analysis. However, to be eligible the information must also be "original," meaning that it is not already known to the OSC and not publicly available. Nevertheless, critical analysis of publicly available facts may be considered original information if the analysis brings to light serious misconduct not previously known. Further, the information must be provided on a voluntary basis and cannot have been compelled under the Securities Act or requested or compelled by another securities commission or a self-regulatory agency.

Payment of awards

In a departure from how the program works at the SEC, payment of the award to a whistleblower would not be contingent on collection of the sanction monies but would only be paid upon final resolution of the matter, including any appeals. Acknowledging that in certain cases this could take years to resolve, OSC staff reiterate that a final decision with the imposition of sanctions or payment would be needed before an award could be made to a whistleblower. The OSC proposes to fund the program through payments to the OSC of administrative penalties, disgorgement and settlement amounts that are not otherwise paid to harmed investors. Given that payment regardless of recovery could result in less funds available for other OSC initiatives, it is a policy that OSC staff will continue to consider.

Reporting under internal compliance channels

The Report notes that individuals could be hesitant to report misconduct internally due to a fear that the individual would lose whistleblower status should someone else in the organization subsequently report to the OSC. Therefore, the OSC's proposal would not require that individuals report internally before reporting to the OSC. Not to undermine and recognizing the importance of internal compliance programs in discouraging misconduct, and to continue to encourage internal reporting, the OSC would consider the timing of an individual's initial internal report in determining who reported information first and was eligible.

Notably, if a whistleblower reports misconduct through internal channels, failure by issuers and registrant firms to promptly and fully report serious breaches to staff, or continuance of the inappropriate conduct or failure to correct the problems, may result in no credit for cooperation when the issuer or registrant is ultimately brought to account for the misconduct. In light of this, the OSC also encourages issuers and registrant firms to review their internal reporting processes to ensure they are robust and effective.

Protecting Whistleblowers

To encourage whistleblowers to come forward and protect them from retaliation, the OSC proposes three distinct and new measures:

  • making it a violation of securities law to retaliate against a whistleblower (thereby permitting OSC Staff to prosecute the employer through a proceeding under s.127 of the Securities Act);
  • providing the whistleblower with a civil right of action against an employer who violates the anti-retaliation provision; and
  • rendering contractual provisions designed to silence a whistleblower unenforceable.

The Report notes that similar anti-retaliatory prohibitions are found under provincial labour and employment laws, as well as under both provincial and federal public sector whistleblower legislation, the Criminal Code and the Competition Act. It further notes that while victims may have the right to file a complaint with the Ontario Labour Relations Board (the OLRB), they view deterrence to be greater where enforced by enforcement staff under the Securities Act.

Addressing a somewhat contentious issue in the US, under the Program, staff notes that the anti-retaliation protections should available to both individuals who report possible violations of the Securities Act "up the ladder" through their employer's internal compliance reporting system in addition to those who report directly to the OSC. It remains to be seen, however, whether the actual provisions enacting the protective measures will go far enough to codify this expansive view, an issue that has been the subject of litigation both in the US and in Canada.

Lastly, the OSC will also attempt to deal with measures implemented by an employer that are designed to silence whistleblowers, such as confidentiality agreements, separation agreements and employment agreements that contain confidentiality clauses or disparagement clauses. To this end, the OSC is considering whether the proposed anti-retaliation provisions should expressly provide that contractual restrictions designed to impede or discourage whistleblowers from reporting possible violations of securities laws to the authorities are not enforceable.

Under the Program, the OSC would use "all reasonable efforts" to keep an individual's identity confidently subject to some significant exceptions, including where required under a s.127 administrative proceeding to permit a respondent to make full answer and defence, to make staff's case against a respondent and where information is provided to another regulatory authority, a self-regulatory organization or law enforcement agency.

The OSC is also considering whether to adopt a policy that would enable a whistleblower to remain anonymous to the OSC. This would be the case at least for a period of time after providing information in order to encourage individuals to come forward knowing they can remain anonymous until they learn whether the information has resulted in an administrative proceeding.

Request for Comments

The OSC first announced that it was considering a whistleblower program in 2011, the same year that such a program was adopted by the SEC. The Report notes with respect to the SEC program, that over 50% of the tips received by the SEC in 2014 comprised of cases involving sophisticated players, raising complex issues, and being difficult to uncover without the assistance of a whistleblower, such as corporate disclosure and financial statements, insider trading, market manipulation and unregistered offerings.

While the Program would be a first for securities regulators in Canada, similar programs are already in place with the Investment Industry Regulatory Organization of Canada (IIROC), the Competition Bureau and, most recently, the Mutual Fund Dealers Association (MFDA). Similar provisions are also contained in the proposed Provincial Capital Markets Act as part of the federal government's latest initiative to develop a cooperative capital markets regulatory regime.

The OSC is accepting comments on its proposal until May 4, and is hosting a roundtable to explore issues raised in its proposal on June 9. For more information, see Consultation Paper 15-401.

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.

Similar Articles
Relevancy Powered by MondaqAI
Crawley Mackewn Brush LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Crawley Mackewn Brush LLP
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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