The Ontario Securities Commission's new Office of the
Whistleblower opens for business on Thursday. The recently
announced program mimics the regime established by the U.S.
Securities and Exchange Commission several years ago, and will pay
out substantial awards for credible, actionable, original
information that leads to convictions and/or the recovery of funds
from wrongdoing in Canadian capital markets.
The OSC program promises to pay whistle-blowers up to $5-million
for tips. To be eligible, a tip must lead to sanctions of at least
$1-million or more. Controversially, "culpable
whistle-blowers" are eligible. The OSC news release announcing
the program refers to "strong incentives" that will act
as a "game-changer."
At first blush, these high expectations may be warranted: The
SEC has received more than 15,000 tips and has paid more than $85-million (U.S.) in awards to 32
whistle-blowers since it introduced its rewards-based program in
2011. However, while the SEC's awards can be significant (the
three largest to date are $30-million, $17-million and
$14-million), it is a very small percentage of tippers who actually
The OSC program is not without criticism and concern from public
companies and their advisers. There is concern that it creates an
incentive for those who might otherwise report conduct within their
own companies to "go rogue" and circumvent internal
compliance regimes (now standard corporate governance best
practice) in order to provide "original" information to
This lure may functionally rob companies of their ability to
investigate and remediate potential issues before an OSC
investigation. It may also affect a company's opportunity to
self-report wrongdoing and avail itself of the full range of
reduced sanctions and other options available under the OSC's
no-consent settlement and credit for co-operation regimes.
(According to the SEC's self-reported statistics in its 2015
annual report, approximately half of whistle-blowers who were
entitled to a reward were current or former employees of the
relevant company, and 80 per cent of those reported internally
prior to reporting to the SEC, which suggests that such fears are
Another significant risk is for "tag-along" civil
class actions that often piggyback on the commencement of
regulatory investigations: In the United States, a number of class
actions have been commenced in reliance on whistle-blower
allegations and SEC disclosures investigations, resulting in
A reward-based program may also incentivize individual
whistle-blowers to submit tips that fall short of the
"high-quality, original information" sought by the OSC,
potentially overburdening the agency and simultaneously creating
reputational and financial risks. It seems unlikely that the OSC
will be resourced like the SEC, which launched its well-funded
program after the 2008 financial crisis and numerous financial
There is also the issue of whistle-blower vulnerability.
Considering how few tips will ultimately lead to rewards, the OSC
has introduced measures to ensure that whistle-blowers are
protected. Whistle-blowers represented by counsel may remain
anonymous throughout the investigation and enforcement process, and
are required to give identifying information to the OSC only when
it comes time for payment.
The OSC also plans to prosecute retaliation under the Ontario
Securities Act or the Commodity Futures Act, and to deem
unenforceable any contractual provisions that aim to silence
It remains to be seen whether the Office of the Whistleblower
will truly be a game-changer, but one hopes for sufficient
transparency to track its usefulness.
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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.
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