Wanted: More whistleblowers, bigger awards

The Ontario Securities Commission (OSC) is considering ways to expand its whistleblower program — the only industry tip line in Canada that pays rewards to successful tipsters.

The regulator launched its whistleblower program in 2016, and reported on Thursday that it has paid over $9.3 million to tipsters so far.

Those tips have, in turn, led to enforcement actions against 19 respondents that generated $48 million in monetary sanctions and voluntary payments, along with other penalties, such as trading and registration bans and suspensions.

“The program is a proven success and illustrates the valuable public service that whistleblowers provide,” said Jeff Kehoe, director of enforcement with the OSC, in a release.

“Whistleblowers play a critical role in advancing our enforcement efforts against wrongdoers and protecting investors from harm,” he said. “We commend the strength and fortitude of the individuals who come forward with tips.”

The OSC indicated it is looking to expand the program, including “exploring the potential to issue more awards and larger award amounts.”

Already, the regulator can issue awards of up to $5 million. However, the U.S. Securities and Exchange Commission’s (SEC) whistleblower program, which was the model for the OSC’s program, pays awards of up to 30% of the sanctions collected as a result of an enforcement tip, with no upper limit.

The SEC’s program has so far paid over US$1.3 billion to tipsters, including a couple of awards in excess of US$100 million. Canada has been a strong source of tips to the SEC, trailing only the U.S. and the U.K. in the number of whistleblower tips generated.

In addition to looking for ways to issue more or larger awards, the OSC said it intends to increase public awareness of the program and target these outreach efforts to “attract more tips relating to emerging and novel issues like greenwashing, auditor misconduct, improper tied selling or misuse of algorithms and artificial intelligence.”

Over the past five years, the number of tips the program receives each year has increased by an average 17% annual rate, the OSC reported. It said it has received tips from 30 countries “covering a diverse range of complex or hard-to-detect misconduct.”

“Tips that are most likely to result in successful enforcement action leading to monetary awards are made up of high-quality, timely, specific and credible information and often include some form of analysis,” the regulator said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.