OSC Whistleblower Regime Updates: civil cause of action for whistleblower reprisals

The Whistleblower regime of the Ontario Securities Commission (the OSC) has been updated to provide a civil cause of action for whistleblowers who experience reprisal for cooperating with the OSC. For a summary of the current regime, see our previous article.

New Statutory Cause of Action for Whistleblowers

Currently, the OSC expects that employers will not discipline, demote, terminate, harass or otherwise retaliate against a whistleblower who has made a report either “up the ladder” internally or directly to regulators.[1] The OSC also expects employers not to take action, through contractual agreement (including confidentiality agreement) or otherwise, to impede a whistleblower from making a report to regulators.

Last November, the Ontario government published the 2017 Ontario Economic Outlook and Fiscal Review in which it announced its intention to provide a civil cause of action for whistleblowers who experience a reprisal for cooperating with the OSC.[2]

The Securities Act and the Commodity Futures Act have now been amended to introduce a civil cause of action for whistleblowers who experience reprisal for cooperating with the OSC. In particular:

  • The whistleblower may bring an action in the Superior Court of Justice or may make a complaint to be resolved by binding arbitration.[3]
  • The company has the “burden of proof” to demonstrate that it did not engage in a reprisal against the employee.[4]
  • The court (or arbitrator) may order (a) the employee’s reinstatement to the same seniority seniority status that the employee would have had but for the contravention, and/or (b) two times the employee’s remuneration (payments, benefits and allowances) from the time of the contravention to the date of the order, with interest.[5]

The new legislation makes it important for companies to follow a well-defined and documented process when disciplining an employee who is known to be a whistleblower. In any civil action under the new legislation, the company will have to prove that any discipline imposed on a whistleblower is not directly or indirectly connected to the whistleblower’s reporting of potential misconduct.

Another potential change to Ontario’s Whistleblower regime on the horizon

The OSC has proposed an amendment to clarify that in-house counsel who report misconduct in breach of the applicable law society rules will not be eligible for a whistleblower award.

Currently, an individual who meets certain eligibility criteria and who voluntarily submits information regarding serious securities-related misconduct to the Commission is eligible for financial compensation. Under the current Program, in-house counsel is ineligible for a whistleblower award, except where

  1. whistleblowing is necessary to prevent substantial injury to the organization or investors;
  2. there is reasonable basis for in-house counsel to believe that the subject of his or her submission is engaging in conduct that will impede an investigation of the misconduct; or
  3. at least 120 days have elapsed since the whistleblower received the information and reported it internally, or became aware that it had been reported internally.[6]

Under the proposed amendment, the foregoing exceptions would not apply to in-house counsel, thus clarifying that information subject to solicitor-client privilege will not be rewarded by the Commission. The OSC proposal will be published for a 60-day comment period. Comments are due by March 20.

[1] Section 121.5 of the Securities Act, R.S.O. 1990, c. S.5.

[2] Ontario, Ministry of Finance, 2017 Ontario Budget: A Stronger, Healthier Ontario, Chapter VII (Taxation) (2017).

[3] Section 121.5(4) of the Securities Act, R.S.O. 1990, c. S.5. The option to make a complaint to be resolved by binding arbitration applies in the unionized/collective bargaining context.

[4] Section 121.5(5) of the Securities Act, R.S.O. 1990, c. S.5.

[5] Section 121.5(6) of the Securities Act, R.S.O. 1990, c. S.5.

[6] OSC Policy 15-601, s. 15(2).



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