Does a securities arbitration panel have the power to award punitive damages?
In Alaska, a securities arbitration panel has the power to award punitive damages. Punitive damages are a type of damage award which go beyond what is necessary to compensate the claimant for economic loss and instead are meant to punish the wrongdoer and to deter similar bad behavior in the future. Punitive damages can be awarded in securities arbitration cases when the panel finds that the wrongdoer has acted in a malicious, oppressive, or fraudulent manner. For example, if a broker has committed fraud by misappropriating funds, a securities arbitration panel can find that the broker acted in an oppressive or malicious manner and can award punitive damages. The amount of punitive damages, if any, is up to the panel and is usually decided based on the seriousness of the wrongdoer’s misconduct. The primary purpose of punitive damages in Alaska securities arbitration proceedings is to deter other brokers from engaging in similar misconduct in the future. The Securities and Exchange Commission encourages arbitration panels to award punitive damages whenever appropriate in order to ensure the public’s protection from securities fraud. It is important to note, however, that punitive damages can only be awarded if the panel finds that the wrongdoer acted maliciously or oppressively.
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