Mary Jo White, the chair of the U.S Securities and Exchange Commission, was the keynote speaker before a conference organized by the Ontario Securities Commission in Toronto on October 23. In a discussion about the OSC potentially implementing a whistleblower reward program in Canada, Ms. White was unequivocal in her praise of the success of the SEC whistleblower reward program in the United States. “What has struck us is how high the quality is of a much more significant percentage than we thought would occur,” Ms. White said. She further noted that the SEC whistleblower reward program “has yielded very significant information on very serious securities fraud” and she praised the program as “enormously successful.”
Ms. White also noted that, despite the common misconception that whistleblower reward laws may undermine internal corporate compliance programs, the compliance officials she had spoken with since the SEC’s whistleblower reward program began have noted “that people are coming to them with the same or even greater frequency than they did before.” A recent blog post by Kohn, Kohn & Colapinto partner Stephen Kohn addressed the issue of how whistleblower reward programs result in an increase in the likelihood of employees reporting misconduct internally. See The False Claims Act and Related Laws “Make Reporting More Likely.”
Despite years of study, Canadian securities authorities have so far been hesitant to create a whistleblower reward system similar to that of the U.S. The OSC, which has been considering a whistleblower reward program for over 4 years, is expected to publish a concept paper this fall to continue the discussion of the issue.
Canadian securities authorities have set up whistleblower hotlines in recent years, but with no incentives, protection against retaliation or promise of confidentially, few calls have been received. The Investment Industry Regulatory Organization of Canada, for example, logged a total of eight calls in 2013.
In contrast, more than 3,200 tips were delivered to the U.S. Securities and Exchange Commission in 2013, up 7% from the year before. Ms. White “Absolutely” agreed that more has been achieved through the SEC whistleblower reward program than could ever have been achieved without it. In September the SEC program paid out a record award of $30 million for information regarding an ongoing investment fraud which the agency says would have been “difficult to detect” with information from the whistleblowers.