Does a securities arbitration panel have the power to award punitive damages?
In Florida, securities arbitration panels do not have the authority to award punitive damages. Punitive damages can only be awarded in civil court, as they are a punishment for the amount of harm done in a securities dispute. Rather, arbitrators in Florida are limited to awarding compensatory damages, which are designed to make the harmed investor “whole.” That is, compensatory damages are intended to restore any financial losses suffered due to wrongful or negligent conduct related to the sale or purchase of securities. There are several rules that apply to the compensatory damages awarded by arbitrators. For example, damages must be measured objectively and should not be awarded as a penalty for breaching a contract. In some cases, compensatory damages may include attorney’s fees paid by the wrongdoer, but only if the wrongdoer acted in bad faith. Securities arbitration panels in Florida have the power to award compensatory damages in order to make the harmed investor whole. Punitive damages, however, are not available in these proceedings. Plaintiffs seeking punitive damages must pursue their claim in civil court with a judge and jury.
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