Ontario, Canada Passes An Award Based Whistleblower Program

What Happened?

On July 14, 2016, the Ontario Securities Commission adopted OSC Policy 15-601 which is a Whistleblower Program that included financial rewards for whistleblowers for the first time in Canadian history.

The Background

Before the enactment of OSC Policy 15-601 Whistleblower Program, Ontario did not have specific whistleblower laws. Courts had to piece together portions of the Canadian Criminal Code, Public Servants Disclosure Protection Act, and the Securities Act in order to determine the outcome of whistleblower cases. Many perceived this system to be inconsistent and unreliable. This inspired the Ontario Securities Commission to enact legislation aimed at protecting and incentivizing whistleblowers.

The Motivation

After observing the success of the United States Dodd–Frank Wall Street Reform and Consumer Protection Act, the Ontario Securities Commission (OSC) became convinced that the key to a successful whistleblower program was an award. This motivated the OSC to implement OSC Policy 15-601 Whistleblower Program (Program) which contained a whistleblower award for the first time in Canadian history.

Who Can Be A Whistleblower In Ontario?

The Program defines a whistleblower as an individual who voluntarily provides original information regarding a violation of Ontario securities law in accordance with specified reporting procedures. A whistleblower does not necessarily have to be an employee. A supplier, contractor, or client can qualify as a whistleblower as long as they voluntarily report new information to the OSC. This information must be based upon the individual’s independent knowledge and must not be public. An individual can still be considered a whistleblower even if they are found to have participated in the misconduct. Of note, a company or organization cannot be a whistleblower.

What Protections Can A Whistleblower Receive?

Under the Program, a whistleblower is granted protection of confidentiality as well as protection against reprisal. The OSC must make all reasonable efforts to protect the whistleblower’s identity. However, this information may be revealed in order to permit the accused to respond to the report of misconduct. The Program also protects the whistleblower against any action taken against them that negatively affects their employment. If a reprisal occurs, the OSC may take action against the employer. A whistleblower may also file a civil suit against the employer for remedies. Potential remedies could be reinstatement or damages for double the amount of lost earnings the whistleblower suffered.

What Awards Can A Whistleblower Receive?

In Ontario, a whistleblower may receive an award if their report of misconduct results in an enforcement action of over $1 million. However, the whistleblower’s report must contain original information that meaningfully assists the OSC in order to receive an award. A whistleblower award ranges from 5% to 15% of the total judgment. However, the award is capped at $5 million. The OSC considers the timeliness and importance of the report, as well as the whistleblower’s cooperation when determining the award amount. Of note, a whistleblower who participated in the reported misconduct may still be entitled to an award. Their award can also be decreased based upon their degree of participation.

How One Blows The Whistle In Ontario, Canada

While the Program encourages the whistleblower to report misconduct through their employer’s internal reporting procedures, it is not required. Of note, a whistleblower who reports internally to their employer must also report to the OSC within 120 days to be eligible for an award. The whistleblower, or the whistleblower’s attorney, must mail or email a Whistleblower Submission Form to the OSC’s Office of the Whistleblower.

The Canadian Take Away

According to the Ontario Securities Commission, the Whistleblower Program has already been extremely effective in producing whistleblower tips. Since its enactment in 2016, over 200 tips have been reported to the OSC. Even though many consider the Program to be groundbreaking due to the whistleblower award, some have argued that the award is not enough. By capping the award at $5 million, some fear that high level executives will not be incentivized to blow the whistle. Interestingly, the United States Securities and Exchange Commission is currently considering implementing a cap being on whistleblower awards as well. Opponents of this change assert the same argument as the one made in Canada.