The Ontario Securities Commission published the Proposed OSC
Policy 15-601 Whistleblower Program for comment on October
28, 2015, containing some noteworthy changes since Staff's
Consultation Paper 15-401 on February 3, 2015 as
we summarized here. It is open for comment until January 16,
The most lively discussion on the Proposed Policy has centred
around issues which include (1) who is eligible to receive an award
including compliance staff and the culpable; (2) the impact on
internal compliance systems; (3) how much money potential
whistleblowers should receive in order to sufficiently incentivize
The summary below addresses these issues and provides other
interesting highlights as follows:
Who Is (In)Eligible? The Culpable, Officers, Directors,
Compliance, Auditors, Lawyers
Those who have been criminally convicted in relation to the
information will not be eligible. However, individuals complicit in
misconduct may still be eligible for an award, but the amount will
likely be decreased, and no immunity will be provided to them.
Internal or external auditors, CCOs or those providing an
equivalent function, officers, directors, in house and external
lawyers may be eligible for an award in the following
They have a reasonable basis to
believe that the disclosure of the information is necessary to
prevent the conduct at issue and that the subject is engaging in
conduct that will impede an investigation;
120 days have elapsed since they
provided the information to the entity's audit committee, chief
legal officer, CCO (or equivalent) or supervisor.
Impact On Internal Compliance Systems
The policy encourages whistleblowers who are employees to report
potential violations through internal compliance but does not
require that they do so in 'extenuating circumstances' that
might otherwise impede that internal reporting.
Whether a whistleblower participated in internal compliance
reporting first is a factor that may increase the amount of the
A key question for comment is whether the aforementioned
sufficiently requires or promotes internal reporting as a first
Employees remain generally protected from retaliatory actions
from their employer, except where the employee is complicit in the
An "award eligible outcome" is defined as one which
results in the imposition of total monetary sanctions or voluntary
payments by one or more Respondents in the amount of $1,000,000 or
more. The Respondents' appeal period must have expired or
appeal rights exhausted.
The proposed ceiling on whistleblower awards has increased since
Staff's initial Consulting Paper, from $1.5 million to $5
million. The amount of the award will be a percentage between 5 and
15 percent of the total monetary sanctions imposed up to $1.5
million. However, if the OSC collects on these
sanctions in an amount equal to or greater than $10 million, the
award can be as high as $5 million.
At the conclusion of an administrative proceeding, OSC Staff is
to prepare a recommendation including an evaluation of the
information provided to be reviewed by a Staff Committee including
the Director of Enforcement. A recommendation will then be provided
to the Commission who maintains discretion to determine eligibility
and amount. The Commission's decision is not subject to
Quality of Information
The information a whistleblower submits must be original, of
high quality, contain sufficient timely, specific and credible
facts relating to the alleged violation and be of meaningful
assistance to Staff of the OSC. It cannot be subject to
solicitor-client privilege. The information must relate to a breach
of Ontario securities law, but the definition of such a breach has
been expanded from its original scope of the definition found only
in the Ontario SecuritiesAct, to now include
that found in the CommodityFutures Act.
An investor who believes he or she has suffered a loss as a
result of an alleged breach of Ontario securities law would not
generally be eligible as they would not ordinarily meet all of the
required criteria, though there may be circumstances where they
Procedure For Submitting Original Information: Anonymity
A whistleblower may submit information anonymously only if they
are represented by counsel and their counsel follows the required
procedural steps. Before payment of an award, the Commission would
generally require that their identity be revealed.
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