Alberta Securities Commission Introduces Whistleblower Program

The Alberta Securities Commission (ASC) introduced a Whistleblower Program on November 20, which enables whistleblowers to report securities-related misconduct to the ASC without fear of repercussion. This program, unlike others, does not provide awards to whistleblowers. This approach may affect the success of the program in attracting complaints upon which the ASC can act.

What You Need To Know

• The ASC implemented a Whistleblower Program (Program) through the release of ASC Policy 15-602¹ and the simultaneous coming into force of amendments to Alberta’s Securities Act.² The Program is intended to encourage employees to report potential securities breaches to the ASC without fear of reprisal.
• The Program includes a number of new mechanisms and processes (including through legislative amendments) which make whistleblowing easier for employees, including confidentiality protections and protection from reprisal.
• Unlike Ontario’s whistleblower program, the ASC will not offer financial incentives for whistleblower reports that lead to enforcement action.

The Whistleblower Program

The key elements of the Program are similar to Ontario’s Whistleblower Program.³ Some of those elements are explained below.

Reporting tips

The ASC has created an Office of the Whistleblower, which employees may use to report tips about an employer’s securities-related misconduct, including insider trading, market manipulation, fraud or issues relating to corporate disclosure or financial statements. Tips may be reported anonymously.

Confidentiality

Identifying information about a whistleblower is confidential, and such information cannot be compelled from the Commission under Alberta’s Freedom of Information and Protection of Privacy Act.

Protection from reprisals

Reprisals against an employee in response to actual or anticipated whistleblowing activity is prohibited by amendments to the Securities Act. The ASC has the power to investigate potential reprisals and take appropriate action against employers who commit a reprisal. Further, amendments to the Securities Act create a statutory right of action for a whistleblower to claim monetary damages for a reprisal by their employer.

Restrictive contractual provisions unenforceable

Contractual provisions and policies that attempt to prohibit an employee from acting as a whistleblower will be unenforceable.

However, unlike Ontario’s Whistleblower Program, there are no financial incentives for whistleblowers whose tips lead to enforcement action under the ASC Whistleblower Program. The impact of the lack of financial incentive for whistleblowing is difficult to predict. The Ontario Securities Commission program does reward whistleblowers, but it is too early in that program’s life to know whether the possibility of an award is important to a whistleblower’s decision to come forward. The Securities Exchange Commission in the United States also offers awards to whistleblowers, and has paid significant amounts to them, and highlights those awards in its publicity and government reporting.

Considerations for Employers

In light of these developments, employers should consider taking the following steps (which we suggested in response to the OSC’s Whistleblower Program).

• Review existing confidentiality policies to ensure they do not conflict with the Program and the related amendments to the Securities Act. Confidentiality policies should be clear that employees are prohibited from disclosing confidential information except as permitted or required by law.
• Review existing discipline policies to ensure they do not conflict with the amendments to the Securities Act. Discipline policies should be clear that employees will not be disciplined for exercising their rights under any provincial or federal statute.
• Ensure all supervisors and other individuals with the power to discipline employees are aware of the new prohibition against retaliation and its implications.

Review existing whistleblower, ethics and internal control policies to ensure they are consistent with the Program, and consider ways to ensure that internal programs are effective, understood by, and accessible to key employee groups and functions in the organization.

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¹ See http://www.albertasecurities.com/Regulatory%20Instruments/5403538%20_%2015-602%20Whistleblower_Policy.pdf.

² See www.assembly.ab.ca/ISYS/LADDAR_files/docs/bills/bill/legislature_29/session_4/20180308_bill-020.pdf.

³ See “Proposed Changes to the OSC Whistleblower Program.”