The Ontario Securities Commission (OSC) has created a program that encourages individuals to report securities misconduct by offering financial rewards for those who provide information about securities violations. The program, known as the Whistleblower Program, was made available for public comment in 2015 and includes a confidential submission process for individuals to provide information to the OSC.
The OSC may ask for additional information, but whistle-blowers are not typically required to gather additional documents. The OSC will take steps to protect the identity of those who report misconduct and plans to make legislative changes to protect against retaliation for those who report securities violations. In order to be eligible for a financial award, the information provided must be original, high quality, and contain specific and credible facts about serious securities violations that would be helpful to investigators in imposing monetary sanctions or voluntary payments of $1,000,000 or more. The OSC may award the individual 5%-15% of the sanctions or payments made, with the maximum award being $1,500,000 if the total sanctions are $10,000,000 or more. However, it’s important to note that the OSC does not offer immunity from prosecution, but if a whistle-blower reports a violation in which they were complicit, the OSC has the discretion to choose not to prosecute. The Whistleblower Program has been active since 2016, and the OSC has an online guide to assist individuals in submitting complaints. Additionally, it’s worth noting that businesses and organizations are not eligible to be whistle-blowers under this program.
In contrast, whistle-blower protection laws in the United States have a long history dating back over 150 years. These laws can be found in a range of legislation in both the private and public sectors, with the False Claims Act (FCA) of 1863 being one of the earliest examples. The FCA’s qui tam provisions allow private citizens to sue government contractors on behalf of the United States Government and receive a portion of the proceeds. Since its amendment, the FCA has led to the recovery of $35 billion.
In the 1970s, the United States significantly expanded whistle-blower protection laws for federal and private-sector employees. Some examples include the 1978 Civil Service Reform Act, the 1989 Whistleblower Protection Act, and over 18 other industry-specific federal statutes. These include the 1987 Department of Defense Authorization Act and the 2010 FDA Food Safety and Modernization Act.
In the 21st century, corporate scandals involving companies such as Enron and the 2008 financial crisis led the U.S. to undertake a major overhaul of its financial regulatory legislation to restore investor confidence in U.S. financial markets and improve corporate responsibility. One of the most significant pieces of legislation in this regard is the Sarbanes-Oxley Act (SOX), which was signed into law by President George W. Bush in 2002. SOX includes comprehensive rules and regulations for tackling corporate fraud, and important whistle-blower provisions to protect employees of publicly-traded companies who disclose corporate fraud. Section 806 of SOX creates a civil cause of action for employees subject to retaliation for corporate whistle-blowing. Publicly-traded companies may not “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment” as a result of protected whistle-blower activity. The anti-retaliation provisions of SOX also protect corporate whistle-blowers by empowering courts and administrative agencies to award whistle-blowers the monetary and non-monetary remedies. These include reinstatement if the whistle-blower has been fired or demoted, compensation for lost wages, and protection from retaliation in the workplace. Additionally, whistle-blowers may also be able to file a private lawsuit against their employer for damages.
