OSC set to launch paid whistleblower program.

Creates new ‘Office of the Whistleblower’

• The Ontario Securities Commission will officially launch a rewards-backed whistleblower program July 14, and has named l ongtime regulator Kelly Gorman as the first Chief of the Office of the Whistleblower.

“The OSC’s Office of the Whistleblower will be the first paid whistleblower program by a securities regulator in Canada,” said Maureen Jensen, chair and chief executive of the OSC.

“Kelly’s leadership expertise and oversight of several high- profile enforcement initiatives, as well as her accounting background, make her uniquely suited to lead this i nvestigative multidisciplinary team.”

The whistleblower program will pay compensation of up to $ 5 million to whistleblowers who come forward with tips that lead to successful enforcement action.

The OSC, Canada’s biggest capital markets regulator, says the program is expected to increase the effectiveness its enforcement efforts by providing access to high quality information about matters such as insider trading, accounting and disclosure violations, and misconduct by those registered with the commission.

The program will provide important protection for whistleblowers, including confidentiality and anti- retaliation provisions, which are expected to be in place by the time of launch.

Gorman, who some observers viewed as a strong candidate to cover the vacant position of director of the OSC’s enforcement branch, joined the regulator in 2002. She was most recently deputy director of enforcement, where she oversaw the development of the whistleblower program.

She also led the implementation of the OSC’s nocontest settlement program and oversaw investigation and litigation teams specializing in securities- related misconduct.

Earlier in her tenure, she served as the deputy director of the OSC’s corporate finance branch.

Prior to joining the OSC, Gorman’s experience was in the world of banking, with stints at a large financial institution, and at the Office of the Superintendent of Financial Institutions, Can- ada’s top banking regulator.

The OSC first considered introducing a paid whistleblower program in 2010, following on the success of an incentive- backed program introduced by the U.S. Securities and Exchange Commission in the aftermath of the financial crisis of 2008.

The idea was resurrected in Canada a few years later, and introduced last October. Potential rewards of up to $1.5 million were boosted to $ 5 million, provided the OSC is able to successfully prosecute wrongdoers and collect significant sanctions.

Investor advocates have long been in favour of tip lines that pay whistleblowers for bringing forward evidence of white-collar malfeasance that would otherwise go undetected.

But there has been resistance in corporate circles, where t here is f ear t he “bounties” will lead to frivolous claims, or tolerance of misconduct by co-workers so they can later collect by exposing the wrongdoing.