On November 17, the Ontario Securities Commission (OSC) awarded a total of CAD $585,000 to three whistleblowers who provided the OSC with timely information that aided in enforcement efforts.
The whistleblowers include company outsiders who provided the OSC with specialized technical analysis that led to the opening of an investigation and the expansion of an existing investigation. The whistleblowers’ information helped the OSC discover otherwise hard-to-detect securities violations, and each of the whistleblowers provided further assistance to the Enforcement Staff throughout the ensuing investigations.
“The information provided by all three whistleblowers was highly specific and enabled Enforcement Staff to zero in on underlying violations of Ontario securities law,” said Jeff Kehoe, Director of Enforcement at the OSC. “We will continue to recognize individuals who provide us with specialized technical analysis that leads to successful enforcement actions.”
The OSC Whistleblower Program is the first and only securities whistleblower reward program in Canada. Since its launch in 2016, the program has awarded more than CAD $8.6 million) to whistleblowers. The program is modeled off the United States’ highly successful SEC Whistleblower Program. However, a notable difference between the two programs is the size of awards available to whistleblowers.
Through the OSC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action resulting in over $1 million in penalties, are entitled to a monetary award of 5-15% of the total monetary sanctions ordered. However, awards are capped at $5 million. Through the SEC program, similarly qualified whistleblowers are entitled to an award for 15-30% of the monetary sanctions, and there are no caps on awards.
Whistleblower advocates argue that caps on whistleblower awards can undermine the efficacy of whistleblower programs. Earlier in 2020, the SEC voted on rule changes to its whistleblower program. Included in the original proposed rules was a soft cap that would limit the largest awards. Whistleblower advocates argued that an award cap would disincentivize whistleblowers, particularly well-paid executives, and undermine the deterrent effect of the program. In a win for whistleblowers, the award cap was not included in the final rules approved by the SEC. In October, the SEC issued a $114 million whistleblower award – by far the largest in program history.
Like the SEC Whistleblower Program, the OSC Whistleblower Program provides anti-retaliation protections to whistleblowers, including confidentiality.. Thus, the OSC does not disclose any information that may reveal a whistleblower’s identity.