The Ontario Securities Commission will launch its new Office of the Whistleblower on July 14, offering as much as $5-million for tips about securities crimes.
The commission said Thursday its new whistle-blower program will be headed by Kelly Gorman, who was previously one of the OSC’s two deputy directors of enforcement. The OSC has made two major executive appointments this week, also announcing Tuesday that Leslie Byberg will become the commission’s new executive director, making her the OSC’s chief administrative officer.
The whistle-blower program will be the first in Canada to pay for confidential tips from the public that lead to successful enforcement actions by a securities regulator. The OSC said it is launching the program in particular to try to get more information about corporate cases that never come to light without tips from insiders.
The U.S. Securities and Exchange Commission began paying for tips in 2011 and has called the program highly successful, paying out more than US$85-million to 32 whistle-blowers following successful prosecutions. The SEC announced last week that it awarded a former company employee $17-million after a detailed tip led to an enforcement action, and said in May it paid $3.5-million to another company insider whose information “bolstered an ongoing investigation” with additional information that strengthened the SEC’s case.
The OSC will not make payments as large as the SEC awards. The commission will pay whistle-blowers between 5 per cent and 15 per cent of the total penalties imposed in a case as long as there is a successful prosecution that leads to penalties of at least $1-million. Payouts can reach a maximum of $5-million in cases in which the OSC collects penalties exceeding $10-million.
While Ms. Gorman’s appointment is effective immediately, the OSC said it will begin accepting tips under the program on July 14.
OSC chair Maureen Jensen said in a statement that Ms. Gorman’s background in overseeing high-profile enforcement initiatives, as well as her background as a chartered accountant, “make her uniquely suited to lead this investigative multi-disciplinary team.”
Ms. Gorman joined the OSC in 2002 and previously served as deputy director of the corporate finance branch. In the enforcement division, she oversaw the implementation of the OSC’s new no-contest settlement program and led teams investigating and litigating securities-related misconduct.
In an interview in April, Ms. Jensen said the regulator had already received calls from people wanting to pass along tips under the new program, so she is confident it will elicit new information. She said the expectation is that the OSC will learn more about complex cases that would never come to light otherwise because they are “just invisible on the outside.”
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