Publication
Keeping your dawn raid guidance current
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
Global | Publication | October 2015
On October 28, 2015, the Ontario Securities Commission (OSC) released further changes to its proposed whistleblower program. The main changes relate to eligibility of whistleblowers, financial incentives, and the role of internal whistleblower programs.
On February 3, 2015, the OSC released its Staff Consultation Paper on the Proposed Framework for an OSC Whistleblower Program. In response, the OSC received comment letters and obtained feedback through a public roundtable discussion. After considering this feedback, the OSC has now issued a draft Whistleblower Policy and a request for further comments. The draft Whistleblower Policy differs from the Staff Consultation Paper in three primary areas: whistleblower eligibility, financial incentives, and the role of internal whistleblower programs.
The Staff Consultation Paper excluded from whistleblower eligibility auditors, directors and officers, chief compliance officers, and others who learned of the misconduct as a result of the company’s internal process or investigation. The draft Whistleblower Policy provides that these persons may be eligible:
The Staff Consultation Paper also proposed to exclude culpable whistleblowers. The draft Whistleblower Policy changed this position, and permits these persons to receive whistleblower awards. However, the level of the culpable whistleblower’s involvement in the conduct is a factor that may decrease the amount of the award. In addition, the OSC will not grant immunity to culpable whistleblowers.
The Staff Consultation Paper originally provided a cap for the financial award of $1.5 million. The feedback recommended an increase to the cap, noting the need to provide adequate incentive for whistleblowers to report information to the OSC. As a result, the revised Whistleblower Policy provides a $1.5 million cap where monetary sanctions or voluntary payments exceed $10 million and a $5 million cap where the OSC collects monetary sanctions or voluntary payments in excess of $10 million.
Based upon the requirement for collection (rather than mere sanction) to exceed the $1.5 million cap, an award over $1.5 million would be exceedingly rare and therefore, the OSC Whistleblower Policy may not be sufficient to encourage reports of wrongdoing by senior officers in a corporation.
The OSC received numerous comments respecting encouragement and support of internal whistleblower programs. In response, the OSC made changes in the draft Whistleblower Policy:
Unfortunately, the proposal does not require whistleblowers to report internally or justify why they failed to do so as a condition of qualifying for a reward. While requiring an internal report may not be appropriate in all cases, the implementation of robust internal compliance systems and reporting mechanisms should be encouraged. To allow whistleblowers to bypass established internal reporting mechanisms that permit anonymous reporting may disqualify registrants and reporting issuers from being able to self-identify, self-remediate and self-report in order to qualify for credit for cooperation.
Publication
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
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