The Alberta Securities Commission has adopted a whistleblower program that offers confidentiality and protection against job retaliation for whistleblowers. However, the ASC failed to include one of the key factors that make whistleblower programs successful: financial rewards for whistleblowers.
The ASC studied other whistleblower programs and concluded that to be effective, a whistleblower program needs to protect whistleblowers’ identities, have clear and significant consequences for retaliation, and make it easy for whistleblowers to report potential fraud.
It designed its whistleblower program with those goals in mind – ignoring how essential rewards have proven to be for the success of the US Securities and Exchange Commission’s whistleblower program.
Whistleblowers take great personal and professional risks when they speak up. Without financial rewards, the ASC whistleblower program does not provide the incentives that have been so critical in persuading whistleblowers to come forward by offering a counter balance to the possible harm to one’s career and other risks.
The Ontario Securities Commission recognized the value of rewards and decided to offer rewards as part of its whistleblower program when it was created in 2016.
The Alberta Securities Commission whistleblower program’s key features
To encourage whistleblowers, the ASC adopted several elements similar to those the SEC whistleblower program offers:
- Whistleblowers’ identities are kept confidential, and they may submit information anonymously.
- The ASC’s program prohibits retaliation against whistleblowers, their advisors and their families. In a sign of how seriously the ASC takes whistleblower protection, its program allows for penalties of up to Can$1 million for violations of its anti-retaliation provisions, and prosecution and fines of up to Can$5 million and/or imprisonment. ASC whistleblowers who have suffered retaliation are entitled to sue former employers.
- Employers are prohibited from using employment, severance and other contracts to discourage employees from blowing the whistle. For example, an employment contract cannot condition an employee’s separation benefits on a promise that the employee will drop any existing complaints or refrain from submitting complaints to a whistleblower program. The prohibition mirrors SEC Rule 21F-17(a), which forbids “any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality ”
The SEC whistleblower program has been very successful at garnering whistleblower information and bringing enforcement actions. Since the program’s inception in 2010, the SEC’s whistleblower office has received over 28,000 reports from whistleblowers.
The SEC has ordered more than $1.7 billion in enforcement sanctions as a result of information and assistance provided by whistleblowers, including returning $432 million to investors.
The ASC set up its whistleblower program to protect the public and investors from securities fraud, which is an important step. In the future, the ASC may want to consider awards for whistleblowers to help it achieve the same degree of success as its US counterpart.