The Ontario Securities Commission (OSC) is proposing a new whistleblower program that would reward tipsters for alerting regulators to wrongdoing.

The OSC Tuesday published Consultation Paper 15-401 Proposed Framework for an OSC Whistleblower Program that imagines a new whistleblower program that could potentially reward sources of high quality tips in cases that result in monetary sanctions, or settlements, of at least $1 million.

Under the program, tipsters that provide original information to regulators could receive up to 15% of the total monetary sanctions levied in the case, up to a maximum of $1.5 million.

The proposal indicates that the payment of whistleblower awards would not be contingent on the OSC collecting the money ordered in that particular case. Instead, the awards would be funded by the commission through the money that is collected through administrative penalties, disgorgement, and settlements that are not otherwise paid back to victims. However, these payments would only be made once a case is finally concluded, including any possible appeals. The awards would also have to be approved by the commission, following a recommendation from an OSC staff committee that includes the director of enforcement.

The proposed approach, which follows the adoption of similar programs by various other authorities, such as the U.S. Securities and Exchange Commission (SEC) and the Canada Revenue Agency (CRA), aims to encourage the reporting of serious misconduct to the OSC. The commission first suggested that it may introduce this sort of program back in 2011 when it unveiled several other new enforcement tools, including no-contest settlements, which are intended to help it resolve enforcement cases more quickly. That’s the sort of payoff that the OSC is hoping a whistleblower reward program may deliver as well.

Additionally, the commission says that a whistleblower program would provide it with information “that might otherwise be difficult, or even impossible, to obtain”. It also expects that the prospect of whistleblower awards will encourage issuers and industry firms to self-report any instances of misconduct to the commission.

“We have proposed a realistic and concrete program that, in our view, needs to be put into action for the benefit of Ontario investors,” said Howard Wetston, CEO and chair of the OSC. “We see a whistleblowing program as an important enforcement tool — one that will encourage individuals with high quality information to come forward and report misconduct.”

The OSC indicates that it would “use all reasonable efforts” to keep a whistleblower’s identity confidential, that it would not expect a whistleblower to testify at a hearing, and that it would also seek legislative amendments to prevent retaliation against a whistleblower.

The proposal is out for comment until May 4.

The OSC indicates that it intends to host a roundtable during the comment period to encourage further discussion. The details of that roundtable will be announced shortly, it says.