The Ontario Securities Commission (the "OSC") has now
reported that in the month and a half since its rollout, its Office
of the Whistleblower has received more than 30 tips reporting
potential violations of securities laws. Although the OSC's
"bounty for tips" Program is still in its early days, it
appears that it has already generated significant take-up among
would-be whistleblowers seeking a payout. The largest Canadian
securities commission hopes that the numbers demonstrate the
potential for the Whistleblower Program to lead to an increasing
number of enforcement proceedings. The Program and the high level
of interest it has generated underscore the need for companies to
take proactive steps to detect and manage internal problems before
they become the subject of a tip reported by a whistleblower
through the Program's hotline.
As we have previously
discussed, the OSC launched its widely-anticipated
Whistleblower Program on July 14, 2016. The Program incentivizes
individuals to come forward with information on securities-related
misconduct by promising rewards of up to $5-million for reporting
corporate misconduct that leads to a successful enforcement
Although the Whistleblower Program itself does not provide any
protection against reprisals for whistleblowers, the Ontario
Securities Act was amended in conjunction with the introduction of
the Program to prohibit retaliation by employers against employees
for reporting securities violations (as well as against employees
who express their intention to report such violations). Those same
amendments voided confidentiality provisions that precluded or
purported to preclude employees from such reporting.
Developments Since Inauguration of Program
speech delivered to the Toronto Region Board of Trade on
September 27, 2016, OSC Chair Maureen Jensen stated that the
Whistleblower Program had received over 30 tips since its
Ms. Jensen added that "[s]ome of them are the kinds of tips
that we really wanted — serious offences or serious potential
offences in areas that we would never be able to find, such as
misstatements in accounting and disclosure violations." She
also noted that these tips detailed the kinds of securities laws
violations that the OSC has been targeting in its enforcement
The Program has only just begun operation, and it remains to be
seen if the tips received by the OSC will result in more
enforcement actions being commenced and, ultimately, in more
sanctions being imposed. While the
massive awards on the scale paid to American whistleblowers
under the SEC's program are precluded by the $5-million cap
imposed under Ontario's Program, the potential nevertheless
exists for considerable payments to be made to whistleblowers in
Canada. One implication, as previously
discussed, could be an accelerated shift in the role of the OSC
from a body utilizing remedies that aim at prevention and
protection to one more focused on seeking and administering
financial sanctions as a significant regulatory tool.
Against this backdrop, it is critical for companies to have in
place a strong controls system and corporate culture in order to
detect potential problems as early as possible and to protect
employees who come forward to report those problems internally. A
robust approach to internal compliance is the best defence against
the increasingly real risk that boards and management will first
hear about serious misconduct within their organizations from the
OSC as a result of a whistleblower tip.
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.
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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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