Quebec's securities regulator has launched a whistle-blower program to attract tips about crimes, but says it will not pay for the information.
The Autorité des marchés financiers (AMF) said Monday that it has launched a whistle-blower program that is intended to offer protections to individuals who report wrongdoing, including offering tippers immunity from potential civil lawsuits as a result of their reporting.
But the Quebec regulator said it will not take the approach of the Ontario Securities Commission, which is launching a whistle-blower program on July 14 that will pay as much as $5-million for tips that lead to successful prosecutions.
The AMF said it has reviewed whistle-blower programs in Britain and Australia, which do not pay for tips, and said it cannot be "established with certainty" that financial incentives lead to better information. The regulator said it believes whistle-blowers want confidentiality and protection more than cash payments.
AMF chief executive officer Louis Morisset said people who have wanted to pass along information but have hesitated can now use the regulator's secure whistle-blower process, which will encourage more people to provide tips.
"Thanks to these whistle-blowers, who without protection measures would not have come forward, we will be able to identify more offences, intervene earlier and minimize the repercussions on victims," he said in a statement.
The AMF prefers whistle-blowers fill out and submit a form that includes their name and contact information, but says it will accept tips anonymously.
While Quebec will not pay for tips, the Ontario Securities Commission said it was convinced to offer payments because of the success of the whistle-blower program run by the U.S. Securities and Exchange Commission.
The SEC launched its whistle-blower program in 2011 and has called the program a game changer, saying it received almost 4,000 tips in fiscal 2015, ended Sept. 30. The SEC has paid out more than $85-million (U.S.) to 32 whistle-blowers following successful prosecutions, including $17-million paid earlier this month to a former company employee who provided a tip that led to enforcement action.
The OSC said it will pay between 5 and 15 per cent of the total penalties imposed in a case when there are penalties assessed of at least $1-million. Whistle-blowers can receive a maximum of $1.5-million even when the penalties are not paid by the accused person, and up to $5-million when the OSC collects more than $10-million in penalties.
In a report in February, however, the AMF said it concluded that people are primarily motivated to report wrongdoing when they feel their confidentiality can be protected. Jean-François Fortin, executive director of enforcement at the AMF, said in the report that other types of organizations around the world have set up whistle-blower lines without paying for tips.
"We are convinced that this protection, combined with anti-retaliation measures as part of a structured, well-publicized program, will have a definite impact on the quantity and quality of wrongdoing reports made to the AMF," he concluded.
While the AMF said its program contains measures to protect whistle-blowers from reprisals by protecting them from civil lawsuits, the regulator said it will work with the Quebec government to propose further protections be adopted.
In Ontario, for example, the OSC has sought legislative changes to protect whistle-blowers from retaliation by their employers, including retaliation for reporting to the OSC or from reporting wrongdoing internally within their company. The OSC said it expects anti-retaliation provisions to be in place by the time of the July 14 launch of the program.