Canada Advances Securities Whistleblower Program

The Ontario Securities Commission (OSC) has released the latest version of its proposal for rewards to securities whistleblowers in Canada. The proposal would authorize payments of between 5 and 15 percent of the total monetary sanctions imposed and/or voluntary payments made as a result of the whistleblower’s information.

The new program would pay individuals an award up to $1.5 million for monetary sanctions and/or voluntary payments, with an additional $3.5 million available in cases where the OSC actually recovers funds. In the past, the OSC has had a low recovery rate on its settlements.

Staff for the agency are seeking comments on the latest proposal. The OSC is targeting Spring 2016 for the implementation of its whistleblower reward program. The OSC is the largest securities regulator in Canada with the Toronto Stock Exchange operating under its jurisdiction. Canada previously implemented a reward program for paying incentives to tax whistleblowers reporting offshore tax evasion.

Other changes were reportedly made from the earlier consultation paper released the agency. These include the ability to pay culpable individuals an award in the event that sanctions over $1 million are not based substantially on actions the whistleblower directed, planned or initiated; and compliance professionals are eligible for an award if 120+ days have elapsed from their internal reporting.

The program has been modeled after the SEC whistleblower program created by the Dodd-Frank Act. The SEC program has paid out more than $50 million to approximately 20 whistleblowers in its first five years. Dodd Frank just celebrated its five year anniversary this summer.

Because of the success of the SEC program, other countries have been considering changes to their whistleblower rules. The UK Financial Conduct Authority also released new rules concerning whistleblowers which will go into effect next September. The United Kingdom has so far declined to offer rewards to whistleblowers for information about securities law violations.

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