In a bid to get a jump on possible fraudulent activity at Canadian mutual fund dealers, the industry self-regulatory organization, the Mutual Fund Dealers Association of Canada (MFDA), has established a new whistleblower program.

The MFDA announced the new program Friday, saying that it has set up its new initiative to receive information from people that may have knowledge, or evidence, of potential wrongdoing by MFDA reps or dealers, including violations of its rules or securities laws. It says that the program will help it “with the early identification” of possible fraud, allowing it to take action and minimize the risk of harm to the public.

“Tips and information from whistleblowers will help the MFDA enforcement department identify potential fraud and other misconduct and take the necessary regulatory action against responsible parties earlier than otherwise possible, thereby advancing the MFDA’s mandate to enhance investor protection and strengthen public confidence in the Canadian mutual fund industry,” it notes.

However, for prospective whistleblowers, the regulator indicates that, while it will protect their identity, and the information they provide, “to the fullest extent possible”; it concedes that it may be required to disclose whistleblower information to the dealer in question, other regulators, or law enforcement agencies, during the course of an investigation or disciplinary proceeding.

Indeed, it says, “The MFDA understands that the decision to come forward as a whistleblower is not one taken lightly.” And so, its program will provide for an expedited review of sensitive information by senior MFDA management.

The whistleblower team consists of the head of enforcement at the MFDA, Shaun Devlin; Jeff Mount, vice-president Pacific region, and Mark Stott, vice president, Prairie region. It can be reached directly at a toll free at 1-888-466-6332, or by email at whistleblower@mfda.ca.

The MFDA will maintain a dedicated webpage with further information about its Whistleblower Program at: http://www.mfda.ca/whistleblower.

The MFDA isn’t the first regulator to set up a whistleblower program in Canada, the Investment Industry Regulatory Organization of Canada (IIROC) also has one. The Ontario Securities Commission (OSC) has said in the past that it is considering setting up its own program, following one that was established by U.S. regulators, but it has not yet done so.

In the U.S., the Securities and Exchange Commission (SEC) established a whistleblower service in the wake of the financial crisis that can pay up to 30% of the money it collects in a case to people that provide it with good information. In one instance last year that led to a US$14 million award to a tipster.