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Speaking out pays off as three whistleblowers reap $7.5 million in OSC rewards

by Greg Klein | February 27, 2019

In the first cash inducements of their kind from Canada’s first program of its kind, the Ontario Securities Commission handsomely rewarded three people for exposing securities misconduct.

Their names remain confidential, as do the companies involved and other details that might help identify the tipsters. Their info, on three separate matters, resulted in the companies making monetary payments to the commission.

Speaking out pays off as three whistleblowers reap $7.5 million in OSC rewards

Not without controversy, the OSC’s Office of the Whistleblower began operations in 2016, offering up to $5 million for the lowdown on insider trading, fraud, misleading financial statements and other dirty trading-related deeds. The OSC pays out after proceedings finish and rights to appeal expire, a process that can take several years.

To qualify for rewards, tips must result in over $1 million in sanctions or voluntary payments by wrongdoers. Submissions may be made anonymously, although the tipster’s identity is required for a payoff. Awards range from 5% to 15% of the sanctions and/or voluntary payments, up to a $5-million maximum.

Whistleblowers who took part in the misconduct might still qualify, although the degree of complicity can decrease the award.

Companies can also squeal on themselves. As of June, 11 no-contest settlements from self-reporting returned over $368 million to investors.

The tips “expose complex securities misconduct that may not otherwise come to light, allowing us to take timely action,” noted OSC director of enforcement Jeff Kehoe. “We hope this announcement, alongside our substantive whistleblower protections, will encourage more whistleblowers to come forward.”

Numbers released last June showed the program had attracted about 200 tips, an average of about two per week. After review, 19 of them went to the OSC’s enforcement department, sparking 15 investigations. Another 68 were “shared with another OSC operating branch or another regulator for further action,” the commission stated.

“Our whistleblower program has proven to be a game-changer for the OSC’s enforcement efforts,” said CEO/chairperson Maureen Jensen. “This would not be possible without courageous individuals willing to come forward and provide valuable information about harm to Ontario’s capital markets.” 

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