Article content continued

The OSC surprised some market participants when the plan for a whistleblower program to encourage reporting of serious securities misconduct was unveiled in February. The original proposal stated that a whistleblower could receive up to 15 per cent of monetary sanctions or settlement payments of more than $1 million, up to the cap of $1.5-million.

During subsequent roundtables, some market participants argued that financial incentives should not be capped, and that they should be paid out to whistleblowers when their tips lead to any financial sanctions, even when those sanctions or settlement payments don’t exceed $1 million.

Some companies and law firms, meanwhile, argued that the whistleblower program would undermine internal reporting and compliance by encouraging workers to seek the regulator’s bounty. They also argued that employees could delay reporting or even encourage more wrongdoing in order to ensure the ultimate sanction was large enough for them to qualify for a financial award.

The financial incentive-backed OSC whistleblower program is to be the first of its kind introduced by a securities regulator in Canada.

In February, the OSC said it was considering taking additional steps to ensure the program’s success, such as requesting legislative amendments to the Securities Act to protect whistleblowers from retaliation in their workplaces.

The OSC policy to be unveiled Wednesday is expected to be open to further public comment, with the regulator aiming to have the program in place by next spring.

bshecter@nationalpost.com