Join the rat race

The Ontario Securities Commission is circulating for discussion a proposal that would pay up to $1.5 million to a whistleblower who feeds the regulator information about a serious misconduct of securities law. Comments are accepted up to May 4. Here’s my view right now: stuff and nonsense.

Is the OSC so desperate that they will entice stoolies with cash? Whatever happened to good old-fashioned investigative work? I guess the OSC is so unhappy with its track record that it’s considering this wrong-headed course of action that involves providing confidentiality and protection. I envision a whistleblower given a new name then relocated from Bay Street to Hudson’s Bay while waiting years for finality in the matter.

To be sure, the OSC needs to do something. The last big insider/tipping victory was Andrew Rankin’s settlement in 2008 when he paid a $250,000 fine and was given a lifetime ban from the securities business. The friend who profited from the stock tips, Daniel Duic, made $4.5 million from the information that Rankin passed along. Duic got protection from the OSC against charges and was allowed to keep $1.2 million of the ill-gotten gains in return for testifying. Maybe this is where the OSC got the idea for this foolish new scheme.

Proceedings against big financier names, such as Frank Dunn and others (Nortel) who were acquitted and Garth Drabinsky and Myron Cohen (Livent) who were found guilty, were criminal charges. The OSC was not part of that action. The only other recent big fraud case brought by the OSC that comes to mind is Sino-Forest Corp. The last I heard, the Chinese officials involved weren’t even showing up for the hearings.¬†Success only seems to come for the OSC when they chase down a no-name broker who bilked clients with some pump-and-dump deal.

To my mind, paying a whistleblower is little better than a running a sting operation. Who knows, maybe the OSC will soon ask for comments on that approach, too.

Leave a Reply

Your email address will not be published. Required fields are marked *