A whistleblower program may be part of a comprehensive compliance and enforcement regime that the Alberta Securities Commission (ASC) recently proposed as part of its three-year Strategic Plan (the Plan).
The intention of the Plan, which sets out the ASC’s priorities to 2020, is to better position the regulator “to react to Alberta’s changing economic environment, while upholding a regulatory framework where capital markets can thrive and where there is strong investor protection against market misconduct”. As part of this effort, the ASC will “explore the creation and implementation of a whistleblower program, designed to motivate individuals to report information about serious violations of Alberta securities law”.
If implemented, the ASC’s whistleblower program would be the latest initiative of this type from Canadian securities regulators, following the recent adoptions of whistleblower programs in Ontario and Québec. However, unlike the Ontario Securities Commission’s whistleblower program, the ASC has already ruled out offering financial incentives to whistleblowers, according to the Financial Post. Instead, it appears that the Alberta regulator favours an approach similar to that of Quebec’s Autorité des marchés financiers (AMF), whose new whistleblower program does not offer payments to informants. As we discussed in a previous post, the AMF had “concluded that it cannot be established with certainty that financial incentives generate more quality reporting of wrongdoing, and that the key component of any whistleblower program is in fact the protection offered to whistleblowers”.
It will be interesting to see how much success the AMF/ASC approach generates in comparison with the OSC’s program, under which (as previously discussed) individuals who meet certain eligibility criteria and who voluntarily submit information to the OSC relating to a breach of Ontario securities law may be eligible for a monetary award under certain circumstances. While the OSC has yet to announce any whistleblower payments to date, there is no doubt that whistleblower programs have the potential to be both successful and costly: in the United States, the Securities and Exchange Commission (SEC) reports that awards to whistleblowers have surpassed $142,000,000 for tips that have led to successful enforcement actions since the SEC program’s inception in 2011.
For further information, please see the ASC’s Strategic Plan.