OSC protection for whistleblowers a “work in progress”

Kathryn Daniels, deputy director of enforcement at the OSC, acknowledged that whistleblower programs appear to be both popular and effective.

However, to be truly useful, they need two things, she suggested: an ability to protect those who report violations from possible retaliation; and, monetary incentives, to encourage reporting — both, of which probably require legislative change, she suggested. So, for now, it is still observing the U.S. experience with its new whistleblower regime.

The panel noted that the U.S. Securities and Exchange Commission (SEC) has bought into the value whistleblower programs, setting one up in the wake of the financial crisis and the Madoff scandal. Indeed, director of enforcement at the OSC, Tom Atkinson, reported that Harry Markopolous, the industry analyst that tried to alert the SEC to Madoff long before his scheme was exposed, recently touted the value of whistleblower programs to the OSC.

Nevertheless, Daniels suggested that, while the idea has not dropped off the OSC’s radar entirely, it is, at best, a work in progress.

Indeed, the OSC’s adoption of any new enforcement tools remains under consideration. Daniels also noted that the OSC is “pausing and reflecting” on the idea of adopting several new enforcement tools, which it proposed last year. These proposals didn’t include whistleblower protection, but did call for the OSC to adopt other tools, such as no-contest settlements and a framework for providing credit for cooperation.

Those proposals attracted a lot of comment on both sides of the issues, Daniels noted. The OSC had planned to hold a policy hearing to examine the possible introduction of no-contest settlements (where those facing regulatory allegations can settle without admitting that the didn’t do anything wrong) earlier this year. However, that hearing has yet to be held. And, the OSC officials indicated that it is still considering whether to proceed with those proposals.