What is the maximum award available to a successful claimant in a securities arbitration hearing?
In California, the maximum award available to a successful claimant in a securities arbitration hearing is determined by the Financial Industry Regulatory Authority (FINRA). Depending on the type of claim, the possible awards can span from unpaid wages, up to a maximum of $2,500,000.00. If the claim is a complaint related to fails to deliver—an issue with a security not being delivered on time due to customer or broker error—the claimant has to claim the amount that would have been paid or delivered if the security had been delivered on time. If the claim is an allegation of a securities fraud, the award amount is light of the actual damages sustained by the investor, capped up to $2,500,000.00. FINRA cannot award punitive damages in a securities arbitration hearing. Punitive damages are meant to punish a person for a wrong-doing, but this is not the purpose of a securities arbitration hearing. The arbitration panel will consider the claim and the evidence of both parties and will decide the award, if any. It is important to note that securities arbitration hearings are not a substitute for a civil trial. A hearing before an arbitration panel does not guarantee recovery of any damages, and even if the claimant wins, the award amount may not cover the full amount of damages and costs incurred during arbitration.
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