Whistleblowers need protection

The world needs whistleblowers. They provide a much needed corrective to the threats posed by unchecked corporate power and unfettered government authority. Yet, all too often, whistleblowers pay a high price for speaking up. Regulators and legislators must do much more to support and protect industry insiders that may be willing to expose misconduct.

Too often, whistleblowers are treated like lambs being led to the slaughter. They often suffer financially, personally and professionally for revealing uncomfortable truths. When whistleblowers expose wrongdoing, whether it’s corporate corruption or government misdeeds, they perform a service that benefits the public at large. Yet, the costs are completely their own.

The Canadian securities industry has made a start toward supporting whistleblowers. But, the effort is not nearly enough. Both the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada have whistleblower policies in place that provide a way for industry insiders to report possible misconduct to these self-regulatory organizations (SROs). The Ontario Securities Commission (OSC) has spent several years developing its own whistleblower program modelled on the one adopted by the U.S. Securities and Exchange Commission; the OSC’s program would pay financial rewards to tipsters that expose serious misconduct. But the SROs’ policies should be strengthened and the OSC needs to introduce its proposed program quickly – with statutory support for the protection the OSC promises.

Prospective whistleblowers must be confident that they are protected from the threat of retribution and that their privacy will be preserved. In the case of the OSC’s proposed program, whistleblowers also should be assured that they will be entitled to adequate compensation for the personal and professional risks they take in exposing misconduct.

Corporate structures and government bureaucracies provide plenty of legal cover for individuals who are prepared to do the wrong things. Regulators and legislators should seek to provide at least as much comfort to those who want to do the right thing.