Securities commission to offer whistleblower awards

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If you have information about investment fraud in B.C., you may be able to make up to hundreds of thousands of dollars by passing it along to regulators.

The B.C. Securities Commission is now offering whistleblower awards ranging from $1,000 to $250,000 for helpful tips about serious market misconduct.

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“Often, people who break the law in the investment market or evade our sanctions can’t do it without others noticing,” said commission chair Brenda Leong said. “The BCSC always encourages people to report suspicious activity, and we think these awards provide an added incentive for people to contact us and provide information that will help make our market more honest and fair.”

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The size of the payout will be determined by how quickly the information is reported, how much the tip contributes to the enforcement outcome and the seriousness of the misconduct.

Leong said the commission has always had good co-operation from the public in reporting misconduct, but that the incentives may lead to better information coming forward.

The commission looked at other jurisdictions with paid whistleblower programs, in Ontario and the United States, she said.

Those regulatory bodies have much higher payouts that are made much less often and usually after “one outcome only — they have to have a successful hearing or prosecution,” Leong said. “They pay very rarely. But when they pay, they pay big — we are talking in the millions.

“When we look at the British Columbia situation, the types of cases that we would typically see in our enforcement portfolio are of a different nature. Our cases will involve smaller entities, and one or several individuals, as compared to our counterparts.”

Leong said that B.C. has players that may be new to the market and “they’re trying to raise money from a ton of people, but they mess up. And that’s it. It’s their one shot, and they’re out of the market because they’ve conducted misconduct along the way.”

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Others may be engaged in fraud and are unlikely to pay financial penalties if sanctioned.

The “made-in-B.C.” whistleblower program was designed for the situations the commission has encountered in this province.

Tips that lead to a variety of outcomes, including a halt trade order, issuing of formal allegations, and sanctions after a hearing or a settlement agreement, will be eligible for the cash, Leong said.

“For each of those different outcomes — we think they’re valuable to an effective enforcement regime — we’re willing to pay for good, credible information that leads to one of those,” she said. “We’re hoping that incentivizes people to come forward.”

The amount will be determined by the commission’s executive director, based on staff recommendations.

“The more valuable your information is, the more we may pay you,” she said.

The same information could lead to more than one award, but the total paid would be capped at $500,000.

Mark Hilford, the commission’s deputy director of enforcement, is in charge of the new program.

Starting Tuesday, whistleblowers can report wrongdoing anonymously through an online portal, but would need to provide their name to potentially get an award, Hilford said.

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But he said the B.C. Securities Act protects whistleblowers from retaliation.

Over the past five years, the commission has received an average of 340 complaints and tips annually from individuals. And the commission has opened an average of 59 investigations a year in that same period.

Hilford said the hope is the whistleblower program will mean tips will come “earlier, more often and be of a higher quality. And we’re going to track it as best we can to see if any of those three things turn out to be correct.”

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