From the Regulators

Regulator prepared to pay for information that uncovers major industry misconduct

By James Langton |

The Ontario Securities Commission (OSC) revealed today that its new Office of the Whistleblower will launch on July 14. The new program, which will allow the regulator to pay up to $5 million for tips that lead to significant enforcement action, will be headed by Kelly Gorman, who is currently deputy director of enforcement at the commission.

The aim of the program is to enhance enforcement by generating tips about potential misdeeds that might not otherwise come to light. The OSC expects the initiative will provide it with "access to high-quality information about matters such as insider trading, accounting and disclosure violations, and registrant misconduct."

To encourage whistleblowers, the program is also expected to provide protections for prospective tipsters, such as confidentiality and anti-retaliation provisions.

The initiative is modelled on a similar program adopted by the U.S. Securities and Exchange Commission (SEC) in the wake of the financial crisis of 2008-09. The SEC reports that its whistleblower program has now awarded more than US$85 million to 32 whistleblowers since it launched in 2011. Unlike the OSC's new program, however, the SEC does not cap the amount of whistleblower awards it will pay. Instead, the U.S. regulator's awards are based on the amount of money recovered in sanctions imposed on violators. That policy has resulted in the SEC handing out several eight-figure awards.

"The OSC's Office of the Whistleblower will be the first paid whistleblower program by a securities regulator in Canada and will be headed by Kelly Gorman, an OSC executive with significant experience in securities law enforcement," said Maureen Jensen, chairwoman and CEO of the OSC, in announcing the program's planned launch next month.

Gorman, who has been with the OSC since 2002, is overseeing the development of the whistleblower program. She has led other high-profile enforcement innovations, such as the implementation of the OSC's no-contest settlement program, and has supervised investigation and litigation teams specializing in securities-related misconduct. Before joining the OSC, she worked with the federal Office of the Superintendent of Financial Institutions (OSFI).

"Kelly's leadership expertise and oversight of several high-profile enforcement initiatives, as well as her accounting background, make her uniquely suited to lead this investigative multi-disciplinary team," Jensen said.

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