Does a securities arbitration panel have the power to award punitive damages?
In California, the answer to this question is generally no. Securities arbitration panels in California do not have the power to award punitive damages. Punitive damages are awards that go beyond compensating a claimant for their actual losses, and are instead intended to punish a defendant for their particularly egregious conduct. Securities arbitration panels, in California and elsewhere, are only authorized to award the "actual damages" suffered by the claimant—such as losses of money and/or securities, attorney’s fees, costs and interest. In some cases, the panel can also award other forms of relief that the claimant has requested, such as declaratory or injunctive relief. These are all forms of "actual damages." The panel cannot, however, order a defendant to pay punitive damages, which are usually large awards intended only to punish the defendant for particularly offensive conduct. These types of damages are not recognized or permissible within the framework of a securities arbitration. If a claimant believes that the defendant’s actions were particularly egregious, they may still pursue punitive damages in a separate proceeding in a court of law. However, the panel will not order the award of punitive damages.
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