With the Ontario Securities Commission's new incentive-based
whistleblower program now on the horizon, recent awards under
comparable whistleblower programs in the U.S. are increasingly
relevant to boards of directors, management, internal counsel and
compliance officers in Canada. Last month, the U.S Commodity
Futures Trading Commission (CFTC) announced itself as a major
player in the whistleblower incentive sphere when it revealed
that it had issued its largest whistleblower award to date –
more than $10 million to a tipster whose information led to a major
enforcement action. While the Securities Exchange Commission's
whistleblower program has attracted most of the attention in the
U.S. over the last several years, this major award from the CFTC
may be a harbinger of the kinds of payouts that we could see in
Ontario in the near future.
The CFTC regulates the multitrillion dollar futures and option
markets. Like the SEC, the CFTC's whistleblower program was
created under the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, with whistleblowers eligible to receive
between 10 percent and 30 percent of the amount of monetary
sanctions the CFTC collects for a successful enforcement action
that results from original information submitted by the
whistleblower to the CFTC. While the SEC's and the CFTC's
whistleblower programs are similar, the awards that the SEC has
announced – including an award of $30-million in 2014 –
have dwarfed the payouts made by the CFTC. That is, until now.
The $10-million payout is just the third award that the CFTC has
issued and is orders of magnitude larger than the first two, which
were in the amounts of $240,000 and $290,000, respectively. While
the details of the award are confidential, it is apparent that the
information was provided in connection with a major enforcement
proceeding. The CFTC has trumpeted the award as evidence that the
regulator's whistleblower program is working to protect the
futures and option markets, and as a clear signal to those with
information that the risk of blowing the whistle is worth the
The OSC has said that its whistleblower program will come online
in June 2016, and that it
has already begun to receive calls from would-be tipsters
asking when the program will be up and running. Under the most
recent proposed version of the program, the maximum amount of an
award is capped at $5-million; well short of the astronomical
payouts seen in the U.S., but still more than enough to command the
attention of companies within the OSC's reach. This number will
no doubt be sufficient to encourage many potential whistleblowers
to take information about possible breaches of securities laws
directly to the regulator, without first stopping to alert their
employers' internal compliance or in-house legal
In this regard, the OSC's whistleblower program increases
the unwelcome potential for boards and management to find out about
serious misconduct within their organizations from the OSC, rather
than through their internal compliance systems. As a result, in
order to avoid being caught off-guard and flat footed in the face
of a crisis, it is now more than ever imperative that Canadian
issuers continue to strengthen their compliance programs to detect
misconduct and to provide robust protections and incentives for
employees who report problems internally first.
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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).