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Maureen Jensen
Maureen Jensen

Whistle-blower program yields encouraging results, OSC's Jensen says Add to ...

The Ontario Securities Commission’s new whistle-blower office has received more than 30 credible tips since opening its doors in July, giving the regulator information about violations it could not have learned about otherwise, OSC chair Maureen Jensen says.

“Some of them are the kind of tips that we really wanted – serious potential offences in areas that we would never be able to find, things like misstatements of accounting and disclosure violations,” Ms. Jensen told reporters on Tuesday after a speech to the Toronto Board of Trade.

The OSC launched the whistle-blower program on July 14, offering to pay as much as $5-million for tips that lead to successful prosecutions. Ms. Jensen said it is aimed at uncovering major violations such as insider trading, market manipulation and serious accounting fraud that are difficult to detect from outside without information from insiders.

The OSC wants to target more complex cases and serious violations, she said, and needs tools such as the whistle-blower program to support the strategy.

She also revealed on Tuesday that the OSC is launching a program – dubbed OSC LaunchPad – to help new financial technology companies launch their businesses without running afoul of securities regulations.

Ms. Jensen said technology-based firms are emerging with new business ideas that do not fit into traditional regulations. She said the OSC has already worked with 40 “fintech” firms – including online advisers, peer-to-peer lenders and crowdfunding platforms – to tailor oversight for their businesses.

She said the OSC is encouraging entrepreneurs in the sector to get in touch with the regulator at an early stage, “even in the idea phase,” because many technology providers have never operated in a regulated sector and do not know what is required in terms of investor-protection rules.

“Based on our experience so far, many fintech companies often don’t know what they don’t know about operating in a regulated industry, and that can threaten their ability to launch their model,” she said.

Securities regulators are also launching a program aimed at reducing the burden of regulations on all companies and industry registrants, she said.

The Canadian Securities Administrators, an umbrella group for all provincial securities commissions, is going to conduct a review to figure out ways to simplify securities regulations and will publish a notice in early 2017 to consult about ideas for streamlining, Ms. Jensen said.

Among the initiatives, she said, regulators are discussing whether they can combine some of the mandatory reports that public companies are currently required to submit, including annual information forms, annual reports and annual financial statements, as well as various quarterly reports.

Ms. Jensen acknowledged that regulators often say they want to reduce the regulatory burden on companies, but do nothing concrete toward the goal. “Although it can be hollow, I don’t intend it to be,” she said.

She also said the OSC has completed its review of “comply or explain” disclosures this year to see how companies are dealing with new regulations requiring them to report on their approach to gender diversity on boards and in senior executive roles.

The review found that 55 per cent of companies listed on the Toronto Stock Exchange have at least one woman on their boards, up from 49 per cent last year. Women now fill 12 per cent of board seats, a modest change from 11 per cent last year, Ms. Jensen said.

However, she said some of the findings are “confounding.” For example, she said TSX-listed company boards filled 521 vacant seats over the past year, but only 15 per cent of the new hires were women.

“That means 85 per cent of the time, a board seat was filled by a man,” she said.

“Without an improvement here, we will never reach 30-per-cent female board representation.”

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