The OSC announced this week that it has awarded a total of $7.5 million to three whistleblowers on separate matters. These awards are the first of their kind by a Canadian securities regulator and were made under the OSC's Whistleblower Policy which we discussed in previous articles here and here.
Under the OSC's Policy, eligible whistleblowers may be awarded up to $5 million for reporting serious securities- or derivatives-related misconduct that leads to significant enforcement or settlement outcomes.
Under the Policy, the OSC makes all reasonable efforts to ensure whistleblower confidentiality so the identity of the three whistleblowers, what each whistleblower received, and the related enforcement proceeding were not disclosed. Nonetheless, based on the features of the Policy and given the $7.5 million aggregate amount of the awards, certain deductions can be made regarding the three matters that may have led to the awards.
What we know from the Policy:
- If the sanctions imposed are in the $1 million to $10 million range, then the maximum whistleblower award would be capped at $1.5 million and would not be contingent on the successful collection of the monetary sanctions by the OSC.
- If the sanctions imposed are $10 million or more and the OSC actually collects the monetary sanctions from respondents, then the maximum whistleblower award would be capped at $5 million.
- The amount of each whistleblowing award is discretionary and ranges between 5% and 15% of the sanctions.
- Appeal rights must expire or be exhausted before awards may be granted.
- Unlike the SEC's whistleblowing framework in the U.S. on which the OSC's Policy is largely modeled, OSC whistleblower awards are capped at $5 million, are not exclusively based on monies collected, and are not contingent on the successful collection of monetary sanctions by the regulator.
Ontario's Whistleblower Policy came into effect in July 2016 and was the first of its kind in Canada. During its first two years of operation, it generated approximately 200 tips according to the OSC, 15 of which were associated with active investigations. Securities regulators in Quebec and Alberta have also introduced whistleblower programs, but they offer no financial awards for tips.
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