Proposed Changes to OSC Whistleblower Program

The Ontario Securities Commission's (Commission) Whistleblower Program was launched in July 2016 which encourages individuals and companies to report suspected violations of Ontario securities laws to the Commission. Coincident with the launch of the program, the Ontario legislature made revisions to the Securities Act to prevent a person or company from taking any action that would adversely affect one's employment because they cooperated with the Commission.

What You Need To Know

Two potential changes to the Whistleblower Program have been flagged by the Ontario government and the Commission, respectively..

• The Ontario government said it intends to introduce a civil cause of action for whistleblowers who experience reprisal for cooperating with the Commission.
• The Commission has proposed revisions to the Whistleblower Program to clarify that in-house counsel who report misconduct in breach of applicable law society rules will not be eligible for a whistleblower award. The Commission is seeking comments on its proposal from now until March 20.

Civil Cause of Action for Retaliation

In its 2017 Ontario Economic Outlook and Fiscal Review, the Ontario government revealed its intention to "introduce amendments to securities laws to provide a civil cause of action for whistleblowers where a reprisal is taken against them contrary to securities or commodities futures law."

Although the timing and nature of such amendments has not been clarified, the proposed introduction of a civil cause of action is consistent with protections currently available to whistleblowers in the United States. The Dodd-Frank Act provides a cause of action for employees who provide whistleblower information to the Securities and Exchange Commission (SEC) and suffer retaliation as a result. Similarly, the Sarbanes-Oxley Act 2002 provides whistleblowers with the right to pursue a claim based on reprisal in court under certain circumstances.

In light of this development, employers should ensure their whistleblower policies strictly prohibit reprisal against employees for providing information to the Commission. They should also ensure all supervisors and other individuals with the power to discipline employees are aware of the prohibition against reprisals.

Availability of Whistleblower Awards for In-House Counsel

Under the current Whistleblower Program, individuals who voluntarily submit information to the Commission regarding a breach of securities laws may be eligible for financial compensation (a whistleblower award) in certain circumstances. An in-house lawyer is considered ineligible for a whistleblower award, except in circumstances where (i) whistleblowing is necessary to prevent substantial injury to the entity or investors, (ii) the whistleblower believes the subject of the information is engaging in conduct that will impede an investigation, or (iii) 120 days have elapsed since the whistleblower received the information and either reported it internally or became aware that it had been reported internally.

In response to feedback from the Law Society of Ontario, the Commission is proposing to amend the policy to clarify that the exceptions to ineligibility described above would not apply to in-house counsel in respect of matters that arise while he or she is acting in a legal capacity, unless the disclosure would otherwise be permitted under applicable law society rules.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

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