In a landmark decision, the Ontario Superior Court of Justice has provided its first detailed interpretation of the anti-reprisal provisions under the Ontario Securities Act. In McPherson v. Global Growth Assets Inc., the Court awarded over $5.3 million to a former executive who was terminated after raising compliance concerns.

The ruling is significant for both employers and employees. It clarifies how whistleblower protections operate, establishes a broad interpretation of “reprisal,” and confirms that employees who raise regulatory concerns (even internally) are entitled to strong statutory protection.

For employers operating in regulated industries, the decision signals increased legal exposure where termination decisions intersect with compliance reporting.

Compliance Concerns Within a Regulated Firm

The plaintiff, a senior executive, was hired as Chief Executive Officer and Ultimate Designated Person (“UDP”) of a company regulated by the Ontario Securities Commission. As UDP, his responsibilities included ensuring compliance with securities legislation and promoting a culture of regulatory compliance within the organization.

Shortly after his appointment, governance concerns emerged. The plaintiff became increasingly troubled by internal reporting structures that undermined his compliance oversight and the potential for regulatory breaches tied to management decisions. He raised these concerns repeatedly with the company’s board.

The Termination: A Response to Compliance Reporting

Despite his efforts to escalate compliance issues, the plaintiff’s concerns were not addressed. Instead, he was excluded from key governance decisions. Ultimately, his employment was terminated within months of raising concerns.

The employer maintained that the termination was based on performance issues. However, the plaintiff alleged that his dismissal was a reprisal for raising concerns about breaches of Ontario securities law.

Anti-Reprisal Protections Under the Securities Act

The case required the Court to interpret, for the first time, the anti-reprisal provisions of the Ontario Securities Act.

What Is a Reprisal?

The Act prohibits employers from taking adverse action against an employee because the employee provided information or expressed an intention to provide information about conduct they reasonably believe violates securities law.

Importantly, the statute defines reprisal broadly to include termination of employment and any measure that negatively affects employment.

What Does “Because” Mean?

A central issue in the case was how to interpret the word “because” in the anti-reprisal provisions.

Mixed Motives Are Enough

The employer argued that it could avoid liability by showing a legitimate, non-retaliatory reason for termination.

The Court rejected this argument. Instead, it held that:

• A reprisal occurs if any part of the employer’s motivation was the employee’s protected activity;
• Even where other legitimate reasons exist, the termination is unlawful if it is tainted by retaliation.

This interpretation aligns with other employment statutes, such as the Employment Standards Act and the Occupational Health and Safety Act, which use similar language.

Court’s Findings: Reprisal Established

The Court made several critical findings:

1. Reasonable Belief of Regulatory Breaches

The plaintiff had a reasonable basis to believe that the company’s governance structure interfered with compliance obligations, and there was a risk of violations of securities law.

2. Protected Activity

The plaintiff raised concerns internally and expressed an intention to escalate those concerns. This conduct was protected under the Act.

3. Causal Connection

The Court found that the termination decision was motivated, at least in part, by the plaintiff’s compliance-related concerns. As a result, the termination constituted a prohibited reprisal.

Burden of Proof: Reverse Onus on Employers

A notable feature of the statutory regime is the reverse onus. Once an employee establishes that they engaged in protected activity and suffered an adverse employment consequence, the employer must prove that the action was not a reprisal.

In this case, the employer failed to meet that burden.

Credibility and Evidence: Employer’s Case Undermined

The Court was critical of the employer’s evidence, noting:

• Inconsistencies in testimony;
• Lack of contemporaneous documentation; and
• Failure to produce key records, including board minutes and resolutions.

By contrast, the plaintiff’s evidence was found to be credible, consistent, and supported by documentary evidence. These findings played a significant role in the outcome.

The Remedy: Statutory Damages Without Mitigation

The Court awarded the plaintiff $5,379,808.22, plus prejudgment interest. The damages were based on twice the remuneration the plaintiff would have earned. There was no duty to mitigate, meaning post-termination earnings were not deducted.

The Court declined to award wrongful dismissal damages, aggravated damages, or punitive damages, as the statutory remedy was considered sufficient.

• Wrongful dismissal damages;
• Aggravated damages; or
• Punitive damages.

Critical Lessons for Employers

Employers should take note of many of the principles discussed in this case, including:

1. Internal Complaints Are Protected

Employees do not need to report externally to regulators. Raising concerns internally can trigger statutory protection.

2. Mixed Motives Create Liability

Even partial reliance on an employee’s protected activity can result in a finding of reprisal.

3. Documentation Matters

Failure to maintain and produce records can undermine an employer’s defence.

4. Significant Financial Exposure

Statutory damages can far exceed common law notice, particularly where mitigation is not required.

Key Takeaways for Employees

Ontario employees can also learn critical lessons from the McPherson case.

1. Strong Protection for Compliance Reporting

Employees who raise regulatory concerns are protected, even if concerns are not ultimately proven.

2. Broad Definition of Reprisal

Termination, demotion, or other adverse actions may qualify.

3. No Mitigation Requirement

Successful claims can result in substantial damages without reduction for new income.

Understanding Ontario Securities Whistleblower Protections

McPherson v. Global Growth Assets Inc. marks a significant development in Ontario employment and securities law. The decision confirms that whistleblower protections under the Ontario Securities Act are robust and broadly interpreted.

Employers must exercise caution when managing employees who raise compliance concerns, while employees can take some assurance that the law provides meaningful protection against retaliation.

Haynes Law Firm: Advising Toronto Workplaces on Whistleblower Reprisals & Wrongful Dismissal

Workplace disputes involving whistleblower protections and wrongful dismissal can carry serious legal and financial consequences. Paulette Haynes provides comprehensive, experienced legal solutions in employment law matters, including whistleblower and reprisal claims, executive terminations, and regulatory compliance. 

Haynes Law Firm provides strategic, results-driven advice tailored to your employment situation and proudly serves clients across Ontario. To schedule a confidential consultation, please contact us online or call (416) 593-2731.