CAPITAL MARKETS REPORTER
Canada's main investment industry watchdog has opened a whistleblower hotline to speed up the response to market wrongdoing after a similar move in the United States led to the discovery of multiple frauds.
The whistleblower system is designed to enable "prompt and effective action on reported first-hand knowledge or tangible evidence of potential systemic wrongdoing, potential securities frauds or unethical behaviour by individuals or firms in the investment industry," according to the Investment Industry Regulatory Organization of Canada.
The system funnels calls and Internet messages to the desks of four of the body's top executives, including Maureen Jensen, the head of enforcement and surveillance at IIROC.
"We're trying to help people get right to the top," said Ms. Jensen, who said she answered her first tip call hours after the service was announced.
The focus on regulation and market fraud has been intense in the wake of 2008's stock market meltdown, which exposed crimes such as Bernard Madoff's multibillion-dollar Ponzi scheme, and also exposed the haplessness of some regulators when it came to responding to tips.
In the wake of the Madoff scandal, the U.S. Financial Industry Regulatory Authority created its own whistleblower hotline. Ms. Jensen said she talks regularly with FINRA, which has discovered more Ponzi schemes, thanks to whistleblower tips.
"They are very happy with it," she said of the system. "They don't get a huge number of calls but what they get are very substantive - things you could not have found [because]you have to know where to look."
At IIROC, all tips previously had to go through the regulator's complaint department, where response times could be much longer. That system will remain for less serious complaints. But for calls about crimes or other wrongdoing, people are urged to call the whistleblower line at 1-866-211-9001 so a senior person "can ask the appropriate questions to find out if it's a real tip or just someone who's upset," Ms. Jensen said.
The complaint "doesn't go some place for several months and sit there." In fact, a senior executive is responsible for following up on all calls that are deemed legitimate.