OSC and province propose changes to protect whistleblowers

OSC and province propose changes to protect whistleblowers
Rebecca Wise of Torys LLP says she’s noticed a spike in the number of whistleblower-type investigations.

Ontario is seeking further comment on aspects of its Whistleblower Program, including a proposed revision to clarify that in-house counsel who report misconduct in breach of law society rules won’t be entitled to cash awards.

Last week, two potential amendments to Ontario’s Whistleblower Program were introduced by the province and the Ontario Securities Commission.

The government said it intends to introduce a civil cause of action for whistleblowers who experience reprisal for co-operating with the commission.

The introduction of a civil cause of action for reprisal is a welcome change to Ontario’s Whistleblower Program, says Nadia Campion, partner at Polley Faith LLP in Toronto.

“It gives teeth to the prohibition on employers from taking action that would adversely affect an employee who co-operates with the OSC,” she says.

It also brings Ontario’s Whistleblower Program in line with protections available to whistleblowers in the United States under the Dodd-Frank Act and the Sarbanes-Oxley Act 2002.

“As we know, the American Whistleblower Program has been relatively successful in ensuring that whistleblowers feel protected from reprisal and, therefore, are more inclined to report or disclose misconduct,” she says.

The change will also incentivize employers to ensure that they have strong whistleblower policies in place and that supervisors and managers are trained with respect to dealing with whistleblowers. 

“It also serves to raise awareness for employees that they should not be fearful of doing the right thing, which is to report misconduct first through internal channels and then if necessary to the OSC. Indeed, I think that the change will encourage employees to first use internal reporting systems before going direct to the OSC. This, in my view, is advantageous to organizations,” she says.

The OSC also proposed on Jan. 18 revisions to the Whistleblower Program to clarify that in-house counsel who report misconduct in breach of applicable law society rules would not be eligible for a whistleblower award. It is seeking comments on the proposal from now until March 20.

“To the extent the law society raised concerns, it’s not entirely surprising there would be a push to clarify it,” says Rebecca Wise, lawyer with Torys LLP in Toronto. “My sense is, and I think the OSC’s request for comment made it clear, that the intention was never that individuals acting in their legal capacity could be eligible for whistleblower awards. This is really just clarification of that, simply because the starting proposal was that lawyers acting in a legal capacity wouldn’t have been eligible in any event.”

The changes highlight the fact that in-house counsel have to “walk a very fine line” between reporting misconduct and ensuring that they are complying with their duties as lawyers, such as maintaining solicitor-client privilege, says Campion.

She adds that by making in-house counsel ineligible for a whistleblower award in circumstances where their disclosure or reporting to the OSC would otherwise violate applicable law society rules, the OSC is ensuring that in-house counsel undertake “a careful analysis of, and reflect on, their role within the organization and whether they are acting in a legal capacity with respect to matters they are contemplating reporting.”

“This represents a positive step towards ensuring that clients can continue to consult with and seek advice from their in-house counsel without fear that in doing so they are subjecting themselves to a possible whistleblower report,” she says. “It also protects against the possibility that individuals may be motivated to report in order to secure a financial gain notwithstanding the duties they owe as lawyers to their clients.”   

The Ontario Securities Commission launched its Whistleblower Program in July 2016 and many companies revised policies and came out with their own programs.

Wise says she frequently advises clients on internal whistleblower investigations and that since the adoption of the OSC’s program she’s noticed a spike in the number of whistleblower-type investigations.

“I think there is more of a whistleblower culture in some companies where employees are being encouraged to come forward and companies are taking complaints they receive very seriously and conducting good investigations into them,” she says.

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