The Whistle Blows North of the Border: Canadian Securities Regulator Makes First-Ever Whistleblower Awards

This article was co-authored by Omar Madhany, Associate at Borden Ladner Gervais LLP [1], and Mike Delikat, who co-heads the Whistleblowing Taskforce at Orrick.

On February 27, 2019, the Ontario Securities Commission (OSC)—Canada’s largest securities regulator—announced that it had awarded $7.5 million to three whistleblowers who provided tips that led to enforcement actions. (see OSC news release here). The awards are the first ever made under Ontario’s whistleblower bounty program, which was patterned closely after the bounty provisions of Dodd-Frank.  While these awards are small by comparison to recent SEC bounty awards of $54 million to two whistleblowers in September 2018 and a separate composite mega-award of $83 million to three whistleblowers in a single enforcement action on March 19, 2018, nonetheless these Canadian awards have garnered significant attention and press coverage in Canada.

While the OSC’s whistleblower program was the subject of much attention when it launched in mid-2016, it had since faded from the headlines after the OSC failed to make any whistleblower awards over the following two and a half years.  In an effort to refocus attention on the program, last year the regulator disclosed that it had received approximately 200 tips since the program began and that many of those tips were associated with active investigations.  That disclosure and the three recent awards are sure to send a strong signal to potential whistleblowers in Canada that the OSC is willing to make large awards for tips of securities misconduct.

The effect of the OSC’s recent whistleblower awards may perhaps be felt most acutely by companies that are subject to both OSC and SEC jurisdiction, such as companies interlisted on the Toronto Stock Exchange and NYSE/NASDAQ.  For the past several years, the SEC has disclosed that Canada is a fertile source of tips for its whistleblower program.  Last year, for example, the SEC received 89 whistleblower tips from Canada—the most out of any foreign country.  Whistleblowers who have information about interlisted companies may now decide it is also worthwhile to provide that information to the OSC in the hopes of obtaining a Canadian whistleblower award.  If they do so, interlisted companies may soon see an increase in cross-border investigations and enforcement action related to their operations.

[1] Omar Madhany is an Associate at Borden Ladner Gervais LLP in Toronto, Canada where he specializes in securities and regulatory litigation. Please click here to view his biography.