Canadian Lawyer InHouse

MAY 2015 34 INHOUSE I n d u s t r y S p o t l i g h t HUNT FOR GOOD INFORMATION AND BAD ACTORS In its paper, the commission said the pro- gram aims to motivate people to report misconduct. The proposed system is also designed to enhance OSC investigations by providing the regulator with quality, origi- nal information about corporate underhand- edness. Whistleblowers would receive up to 15 per cent of the total monetary sanctions awarded in hearings or settlements, but only if the sanctions exceeded $1 million. Re- wards would be capped at $1.5 million. Whistleblowers' identities would be protected, and the OSC would create anti- retaliation measures to keep employers from punishing employees for reporting misconduct. Certain types of employees would not be eligible to take part — for instance, anyone employed as a chief compliance offi cer, a director, or an offi cer. People involved in the misconduct, however, may be eligible if they provide quality, original information that enables the regulator to collect more than $1 million in sanctions. Culpability would factor into the OSC's decision on the reward amount. In a summary of the OSC's proposed program, lawyers at Bennett Jones LLP noted that it's similar to the one that the U.S. Securities and Exchange Commission enacted in 2011, with a few differences. For instance, the SEC doesn't cap rewards, whereas the OSC stops at $1.5 million. As well, the SEC only pays whistleblowers after the regulator has successfully collected sanctions. The OSC would pay even if it didn't collect. And while the SEC's program has a mechanism to let people deemed ineligible appeal that decision, the OSC doesn't suggest a similar route of appeal. EFFECT ON INTERNAL COMPLIANCE SYSTEMS An important subject of the consultation paper is the impact the whistleblower system could have on companies' self- monitoring programs. The OSC says these internal mechanisms are important "as a fi rst line of action in promoting compliance with securities laws." And "an OSC whistleblower program is not intended to undermine" such measures. "Those systems may fail, however, for a number of reasons including if an individual fears retaliation as a result of raising concerns within the organization," the OSC says. "The whistleblower program would allow an individual to report serious misconduct to the OSC regardless of the operation of those systems." Ed Waitzer isn't so sure the OSC is pointed in the right direction. The partner at Stikeman Elliott in Toronto suggests that even though the commission says it doesn't mean for its whistleblower program to undermine internal compliance systems, that's just what the program could do. "There are no fi nancial rewards when you report internally," Waitzer says. "The only reward is the satisfaction that the problem is remedied. If I have a choice between getting a bounty or just having the satisfaction of knowing the issue was resolved, there's a pretty good chance I'm going to go for Understand your rights and obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) as it applies to your organization and clients, and when and how to fulfill your obligations under the law. In addition to bringing together legislation, regulations and regulatory documents, an expert in developing anti-money laundering and anti-terrorist financing policy in Canada identifies the policies and procedures you need to reference in order to properly comply with the requirements of the Act. This concise new book is an indispensable resource for legal practitioners, managers and compliance officers. This publication includes: • The most current version of the PCMLTFA, S.C. 2000, c. 17 and regulations • The newly revised FATF international standards – recommendations and interpretive notes • The OSFI and related Guideline (B-8) • FINTRAC guidelines, interpretation notices and reporting forms New Publication Consolidated Proceeds of Crime (Money Laundering) and Terrorist Financing Act and Regulations 2015 With Guidelines and Other Regulatory Documents Charlene L. Davidson, B.A. (Hons), M.A., LL.B. Available risk-free for 30 days Order online: www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 Order # 986501-65203 $99 Softcover approx. 1550 pages March 2015 978-0-7798-6501-7 Shipping and handling are extra. Price(s) subject to change without notice and subject to applicable taxes. 00227XI-A48810

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