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OSC whistleblower inducements bring wronged investors over $368 million

by Greg Klein | June 29, 2018

Rewards to informers have yet to be revealed but the Ontario Securities Commission says wronged investors have benefited from Canada’s first-such cash-for-tips program. During its two years of operation an average of two tips a week has resulted in 11 no-contest settlements that returned over $368 million to investors. Company employees who provide information receive protection, as well as rewards of up to $5 million. But that money could take several years to arrive, given the complexity of investigations, the length of proceedings and the time granted to appeal.

OSC whistleblower inducements bring wronged investors over $368 million

The program calls for inside scoop that’s “high-quality, timely, specific and includes credible facts” about actions including fraud, insider trading, misleading financial statements and trading-related misconduct.

The commission referred 19 tips, about 10% of the total received, to its enforcement branch, where 15 “are associated with active investigations.” Sixty-eight tips “were or are in the process of being shared with another OSC operating branch or another regulator for further action.”

The commission says it endeavours to protect whistleblowers’ identities, guards against employer reprisals and allows informers to act anonymously through a lawyer. Company officials wracked with guilt or apprehension, meanwhile, may also turn themselves in for a possible no-contest settlement.

“The program is still in its infancy, but is already proving to be a powerful enforcement tool, as with our no-contest settlements and the option to self-report,” commented OSC director of enforcement Jeff Kehoe. “These all serve to promote a strong culture of compliance in Ontario’s business community, effectively extending our reach and allowing us to do more to protect investors.”

Read more about the OSC whistleblower program.

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