- On November 19, 2018, amendments to Alberta’s Securities Act (the “Act”) came into force to protect whistleblowers who disclose securities-related misconduct to the Alberta Securities Commission (“ASC”)
- The ASC released ASC Policy 15-602 Whistleblower Program (the “Policy”) on November 20 to complement the amendments to the Act and set out a process for whistleblowers wishing to disclose information to the ASC
- The whistleblower amendments and Policy are intended to allow whistleblowers to “safely and easily” report regulatory breaches without fear of reprisals
Amendments to the Securities Act
Under the amendments to the Act, contained within the recently-enacted Bill 20, a “whistleblower” generally refers to an employee (including independent contractors and directors) who voluntary discloses information to the ASC regarding an alleged contravention of Alberta securities laws by or in connection with their employer. Under the amendments, the identity of whistleblowers will, subject to certain exceptions, remain confidential. Any information obtained from a whistleblower will also remain confidential.
In order to protect whistleblowers, the Act now provides limited immunity to whistleblowers in relation to their disclosures and prohibits whistleblowers from being subject to reprisals in response to whistleblowing activities. Further, companies may not direct a reprisal against an employee whose parent, spouse, partner, siblings or children disclose alleged wrongdoing. “Reprisal” under the Act is defined broadly to include “any measure or conduct that adversely and materially affects employment or working conditions”, and includes such actions as dismissals, layoffs, demotions, suspensions, changes in hours of work, denials of benefits, and threats to take any such measures.
In addition, any contractual term that purports to restrict a whistleblower from disclosing information to the ASC is now unenforceable. Thus, a provision in an employment contract that attempts to prevent employees from disclosing securities violations to the ASC is of no force and effect. Similarly, any other obstruction, or advice, request or direction to obstruct, a whistleblower, is prohibited.
The amendments also create a civil right of action that permits whistleblowers to sue where they have been subject to reprisal by their employer or other employee. Penalties in such cases may include monetary remuneration and/or the reversal of reprisal actions such as a work transfer, change of hours or other adverse change in employment.
ASC Policy 15-602
ASC Policy 15-602, which was released the day after the Bill 20 amendments came into effect, complements the Bill 20 amendments by setting out the ASC’s whistleblower program and providing guidance on the process for providing information to the regulator. The Policy is intended to encourage reports of wrongdoing by creating an easily accessible means by which whistleblowers can disclose information.
To that end, the Policy provides for a whistleblower submission form, as well as a form to be used by lawyers representing whistleblowers, and outlines the specific information a person should include when submitting information to the ASC. Disclosure can be made via mail, courier, hand delivery or email, and anonymous tips will also be accepted. Meanwhile, while the Policy does not require that employees use their employer’s internal reporting process prior to submitting a tip to the ASC, whistleblowers are “strongly encouraged” to do so.
Notably, unlike the Ontario Security Commission’s whistleblower program, the ASC Policy has no provision for financial incentives to be paid to whistleblowers. Rather, the Policy states that whistleblowers involved in misconduct may be entitled to credit pursuant to existing ASC Policy 15-601 Credit for Exemplary Cooperation in Enforcement Matters. Under that policy, credit for cooperation may relieve someone cooperating with the ASC from enforcement action. As such, a whistleblower who could potentially have been exposed to liability for misconduct may have the matter against them resolved without enforcement or with reduced sanction as credit for their disclosing information to the ASC.
As we discussed in an earlier blog post, the ASC ruled out financial incentives for whistleblowers last year. In doing so, the ASC has followed the approach of Quebec’s Autorité des marchés financiers (AMF), as well as international regulators like the U.K. Financial Conduct Authority and the Australian Securities and Investments Commission. As we previously discussed, it is unclear whether the lack of monetary reward generally disincentivizes whistleblowers from coming forward. Quebec’s experience, however, suggests a lack of negative effects resulting from a failure to provide financial incentives. Ultimately, whether the ASC’s experience follows that of Quebec’s AMF remains to be seen.
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