Canada: Incentives Rise In The OSC Whistleblower Program

Increasingly, companies are expected to develop, implement and properly administer complaint handling and "whistleblowing" programs, especially in regulated industries and public companies. As we have written in previous publications, these programs, which should include protection for employees and third parties from retribution for bringing possible wrongdoing to the attention of responsible persons, play a crucial role in maintaining a "culture of compliance" within a business. Recently, capital markets and other financial conduct regulators have established rules and requirements for firms under their supervision, and some have set up their own regimes to help them uncover potential wrongdoing that can negatively impact markets and investors.

On October 28, 2015, the Ontario Securities Commission (Canada's largest capital markets regulator) released its Notice and Request for Comment in connection to the OSC's Proposed Whistleblower Program, Proposed OSC Policy 15-601, open for public comment for 60 days. This Proposed Program is the response to a 90 day comment period following the release of OSC Staff Consultation Paper 15-401 earlier in the year, which included a public Whistleblower Roundtable. The OSC reported that Staff received 17 letters on the Consultation Paper, including one from our firm.

The OSC's Proposed Program would be the first of its kind in Canada, offering a "whistleblower reward" to individuals who report and submit to the OSC information on serious securities or derivatives related misconduct. Like the program contemplated in the Consultation Paper, the Proposed Program would safeguard complainant confidentiality subject to certain exceptions below, and focus on disclosure to the OSC that is voluntary (i.e. not compelled).

There are, however, some notable changes from the Consultation Paper, including the following:

  • Exceptions to confidentiality have been reduced and modified to include the following circumstances:

(a) when OSC Staff is required to make disclosure of the whistleblower's identity in connection with an administrative proceeding under s. 127 of the Ontario Securities Act ("Act") or s.60 of the Commodity Futures Act ("CFA") in order to permit a respondent to make full answer and defence; or

(b) when OSC Staff determines that it is necessary to accomplish the purposes of the Act or the CFA to disclose the information to any of the entities listed in s. 153 of the Act or s. 85 ofthe CFA.

  • If the whistleblower provides information of meaningful assistance to Commission Staff that results in an order for monetary sanctions and/or voluntary payments totalling $1 million or more, he/she could be entitled to an award:

(a) between 5 and 15% of the total monetary sanctions imposed and/or voluntary payments made;

(b) up to a maximum amount of a whistleblower award to $5 million (increased from $1.5 million); and

(c) in which the specific "caps" awarded would be dependent on whether the sanctions were collected.

  • Internal or external auditors, Chief Compliance Officers, officers, directors and in-house counsel are eligible for a whistleblower award in certain circumstances such as when at least 120 days have elapsed since the individual provided the information through the appropriate internal channels.
  • Culpable whistleblowers are also now eligible for an award amount.
  • Proceedings under s. 60 of the CFA are also eligible, with the same criteria as s. 127 proceedings under the Act.

While certain changes made from the Consultation Paper are responsive to some points raised in our comment letter, a number of concerns remain. For example, the program still does not require complainants to first pursue redress through a company's own internal process, and the awards are limited to monetary sanctions ordered (and to an extent, collected).

We remain concerned that the Proposed Program could undermine the important role of designated compliance officials and their ability to support internal protocols by encouraging employees to sidestep or ignore internal protocols in favour of seeking financial reward by reporting directly to the OSC. The OSC Proposed Program responds to these concerns by encouraging whistleblowers who are employees to report potential securities law violations through established workplace protocols. However, the OSC stops short of making this a condition to receiving a whistleblower award under the Proposed Program, stating that extenuating circumstances may impede an employee's ability to report through internal programs. We continue to take the view that eligibility to receive a whistleblower award should be dependent upon the individual's recourse to internal compliance and/or compliance programs, except where it is demonstrated that this was not possible or desirable.

Also, as we have written previously, we are concerned that tying whistleblower awards to penalties reflects and perpetuates a misalignment with the traditional preventative and protective functions of Canadian securities regulators. In our view, the regulators should be focussed more on driving behaviours toward greater compliance rather than penalizing bad behaviour.

The revised whistleblower award program contemplated by the OSC, while apparently modelled on the whistleblower award program of the United States Securities Enforcement Commission, contains material differences. The first, and most obvious, is the absence of prescribed caps in the SEC regime. As well, the SEC program requires the money from imposed sanctions and settlements to be collected. By contrast, under the Proposed Program, uncollected sanctions are not necessary bars to recovery (although an uncollected sanction may impact quantum). To date, the SEC has paid more than $50 million to 18 whistleblowers, including a $30 million award in 2014.

As noted recently, the UK's Financial Conduct Authority released new whistleblower rules for the banking and insurance industry, to take full effect in September 2016.

Those company personnel responsible for overseeing and managing internal complaint handling regimes, such as compliance and ethics officers, in-house counsel and Board members, need to keep abreast of evolving standards and regulatory expectations in respect of these matters. These expectations and standards should inform how individual firms address complaint handling and complainants.

The public comment period for the Proposed Program closes January 12, 2016.

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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.