On July 14, 2016, the Ontario Securities Commission’s Office of the Whistleblower issued a press release entitled OSC Launches Office of the Whistleblower.
This new whistleblower program has been reported with some fanfare in the business press – see OSC Will Now Pay Up to $5M for Tips as First In Canada to Offer Whistleblower Rewards: http://business.financialpost.com/news/fp-street/ontario-securities-commission-will-now-pay-up-to-5-million-for-tips-as-first-in-canada-to-offer-whistleblower-rewards
The actual OSC press release of July 14, 2016, stated:
The Ontario Securities Commission (OSC) today launched the Office of the Whistleblower, the first paid whistleblower program by a securities regulator in Canada. The OSC also published OSC Policy 15-601 Whistleblower Program, which outlines the program’s eligibility criteria and reflects input received from stakeholders on the program.
The OSC’s whistleblower program offers compensation of up to $5 million to individuals who come forward with tips that lead to enforcement action. The program accepts tips on possible violations of Ontario securities law, including illegal insider trading, market manipulation, and accounting and disclosure violations.
“Our whistleblower program is a powerful addition to our enforcement arsenal and a game-changer for securities enforcement in Canada,” said Maureen Jensen, Chair and CEO of the OSC. “The program will enhance our ability to protect investors and achieve better outcomes for our markets by helping us identify and pursue violations of securities law that may only come to light through a whistleblower.”
The program has in place and offers important whistleblower protections. Whistleblowers can report anonymously, and the OSC will make all reasonable efforts to protect the confidentiality of whistleblowers. Anti-reprisal provisions have been added to the Securities Act (Ontario), allowing the OSC to take enforcement action against employers who retaliate against whistleblowers and rendering as unenforceable contractual provisions designed to silence a whistleblower.
“Our program provides significant incentives for whistleblowers to come forward and offers robust protections,” said Kelly Gorman, Chief of the Office of the Whistleblower. “These protections apply even if the information provided to the OSC does not result in enforcement action or does not meet the criteria for an award.”
The Office of the Whistleblower is now open to accept tips through its dedicated website at www.officeofthewhistleblower.ca. Individuals are encouraged to come forward and report possible violations of Ontario securities law. Whistleblowers can report anonymously if they are represented by a lawyer. To be eligible for an award, whistleblowers, and the information they submit, must meet specific criteria outlined in the OSC’s whistleblower policy.
Representation of Whistleblowers by Lawyers Due to Dangers to Confidential Informants
As mentioned in the OSC press release, whistleblowers can report fraud anonymously if they are represented by a lawyer. Those who have a serious matter to report to the OSC are well advised to seek counsel before reporting their information.
A review of the Stack story is illustrative of the problems that can occur. In a 2015 decision from Durham Region, the Durham Regional Police were ordered to pay $345,000 in damages to Ms. Stack due to the harm that she incurred after agreeing to be a confidential informant – see http://news.nationalpost.com/news/canada/police-confidential-informant-identity-leaked
Ms. Stack’s story is not complex. It is a case involving weapons, not fraud, but the principles apply to confidential informant cases generally.
Ms. Stack was told by her neighbour that another neighbour’s teenage son was in possession of handguns, which were stolen during a break and enter. The neighbour son’s name was Patrick Ellison. Ms. Stack was quite concerned as Patrick Ellison occasionally looked after her kids for her. Ms. Stack’s neighbour did not wish to report the crime, because the guns were stolen from her house. Ms. Stack felt that she had to tell police, but she did not want the Ellison family to know that she was the one who reported the matter. Ms. Stack decided to contact police and ask for anonymity. In retrospect, she likely should have just called Crime Stoppers.
The intake officer promised Ms. Stack that the police would not disclose her identity. The police were very eager to meet her. Ms. Stack reluctantly told the police what she knew in a videotaped interview in a police station after receiving a verbal assurances her identity would remain confidential. Shortly thereafter Patrick Ellison was arrested. His father then began threatening the well-being of Ms. Stack and her family by such means as driving his vehicle at her, constant harassment and overt surveillance. It turned out that the police had disclosed the videotaped interview as part of Crown disclosure to the Ellisons’ defence lawyer.
Patrick Ellison was convicted, but the psychological damage that his father inflicted on Ms. Stack and her family was significant. The Stack family had to move out of the neighbourhood to escape the ongoing trauma. But for the breach of the confidential informant agreement by police (and the criminal conduct of the Ellison family), the Stack family would not have had to leave. The Ellisons were not worth suing, so Ms. Stack sued the police.
For further information on recovery by confidential informants due to police negligence, see our blog Fraud Victims, Whistleblowers, and Breach of the Confidential Informant Undertaking – https://investigationcounsel.com/post/fraud-and-the-confidential-informant-whistleblower/
The Law on Confidential Informant Agreements
The law on confidential informant agreements is as old as criminal law itself. If a person provides information to police in exchange for a promise of anonymity, that anonymity must be guaranteed. There is only one exception to this form of legal privilege – when disclosure is required to prevent a miscarriage of justice where innocence is at stake. One court summed up the law this way:
Informer privilege is an ancient and hallowed protection which plays a vital role in law enforcement. It is premised on the duty of all citizens to aid in enforcing the law. The discharge of that duty carries with it the risk of retribution from those involved in crime. The rule of informer privilege was developed to protect citizens who assist law enforcement and to encourage others to do the same: R. v. Leipert. See also Bisaillion v. Keable (Supreme Court of Canada).
Anonymity is Important
Anonymity is important, because in some cases the informant is well intentioned but may be mistaken in the information they wish to report.
For an article on the type of liability an informant may incur, see Lawyer Concerned About Blindside Allegations Under the New OSC Whistleblower Program: http://www.canadianlawyermag.com/legalfeeds/2956/lawyer-concerned-about-blindside-allegations-under-osc-whistleblower-program.html
Those who wish to be whistleblowers are well advised to have a lawyer negotiate a contact for them.
Quantifying Financial Awards for Whistleblowers with the OSC
No information has been provided by the OSC as to how it will quantify the financial award for whistleblowers. The OSC reports (http://www.osc.gov.on.ca/en/whistleblower.htm):
Whistleblowers who report information that leads to an OSC administrative proceeding resulting in monetary sanctions and/or voluntary payments of $1 million or more may be eligible for a financial award of up to $5 million.
In our view it is in the interest to whistleblowers to have the assistance of a lawyer when negotiating the amount of the award.
At Investigation Counsel, we investigate and litigate fraud recovery cases. If you discover you are a victim of fraud, contact us to have your case assessed and a strategy for recovery mapped out before contacting police or alerting the fraudster. We also promote victim advocacy and academic discussion through various private and public professional associations and organizations. And yes, we act for whistleblower. If you have an interest in the topics discussed herein, we welcome your inquiries.