In July 2016, the Ontario Securities Commission (OSC) launched the Office of the Whistleblower (OWB), the first paid whistleblower program created by a securities regulator in Canada. The Analyst caught up with Christine Tabbert, deputy director of the enforcement branch and head of the OWB, to hear about some of the biggest accomplishments and challenges the program has encountered in its first two years.

How has the Whistleblower Program been received by the business community? Are you pleased with its adoption rate and the number of participants?

We’re pleased with the progress of the program. It has become an important tool for protecting investors by generating specific, timely, and credible tips, as well as providing an opportunity to encourage a culture of compliance. It has proven to be effective at shining a light on possible violations of Ontario securities law that previously would have remained hidden, such as illegal insider trading, market manipulation, and misleading financial disclosure.

Globally, there’s a much greater understanding of the value and public service that whistleblowers provide in coming forward to stop or prevent misconduct. We’re pleased our program is part of the growing momentum of effective whistleblower programs around the world. It offers protections for individuals who come forward, as well as compensation of up to $5 million for tips that lead to enforcement action.

How do you grade the overall effectiveness of the initiative? How does the OSC plan to continue to improve the program?

As of the end of June 2018, when we completed a review of our first two years, the program had generated approximately 200 tips. That’s an average of about two per week.

Beyond the number of tips received, we also measure our effectiveness by the attention we generate to protect investors and raise awareness of wrongdoing. We also look at the quality of the information we’re receiving that we wouldn’t have otherwise had access to. The program was launched to target serious and hard-to-detect regulatory offences. We’ve received information from whistleblowers on a broad range of securities-related misconduct, such as financial reporting and disclosure issues, and fraud-related matters. To date, we’ve referred approximately 10 percent of the submissions to enforcement investigation teams.

Our Whistleblower-only hotline has allowed us to engage with more than 200 whistleblowers and counsel representing whistleblowers, and we have participated in outreach events highlighting the program, which have been attended by approximately 4,000 individuals. We’ve received feedback that companies are enhancing their internal compliance functions to encourage internal reporting. As public awareness of the program increases, so, too, does the effectiveness of the program.

On what areas is the OWB focusing now?

With market participants reviewing their internal controls in this new environment, we’ll be focusing on how whistleblowers are being treated in light of the anti-reprisal provisions in the Securities Act (Ontario). We’ll be vigilant for reprisals taken against whistleblowers, and take enforcement action as necessary. We’ve already strengthened these provisions, with legislative revisions in December 2017.

We’ll continue to engage with whistleblowers and the public to raise awareness of our program and encourage whistleblowers to come forward sooner with specific, timely, and credible information about complex securities misconduct. If we get people to come to us sooner, it means we can potentially stop the misconduct and harm earlier—and prevent investor losses. We’re considering how we can target information relating to specific kinds of misconduct to protect investors from the most imminent securities-related threats.

In addition to the Whistleblower Program, you also have no-contest settlements. What do these entail?

No-contest settlements are available in specific circumstances for cases that meet strict eligibility requirements. Eligibility requirements may include self-reporting, fully co-operating with staff, and fully compensating investors. No-contest settlements are intended to recover money for investors much more quickly than with other alternatives (e.g., class-action lawsuits). From March 2014 to September 2018, the OSC entered into 12 no-contest settlements totalling more than $369 million in compensation for investors.

Market participants want to do the right thing, and we want to provide avenues for them to self-report so as to protect investors and promote confidence in our capital markets.

Collectively, our enforcement initiatives serve to promote a strong culture of compliance in Ontario, allowing us to do more to protect investors.

Submit tips to the Office of the Whistleblower at officeofthewhistleblower.ca.