What is the scope of a securities arbitration award?
The scope of a securities arbitration award in California is determined by the Financial Industry Regulatory Authority (FINRA) and the California Department of Business Oversight (DBO). The award can cover up to three types of compensation: compensatory damages, punitive damages, and attorneys’ fees. Compensatory damages are intended to compensate investors who have experienced financial harm due to the misconduct of their broker or investment adviser. These damages are meant to make up for any out-of-pocket losses, such as lost profits or additional fees. Punitive damages are meant to punish the party at fault for their actions and serve as a deterrent to future misconduct. These damages may be awarded if the misconduct is particularly egregious. Attorneys’ fees are another type of compensation that can be awarded to an investor. These fees are intended to reimburse the investor for the legal costs associated with pursuing a securities arbitration claim. If an arbitration panel finds that the broker or investment adviser is liable, the award will typically include some type of relief for the investor. This relief could include monetary compensation in the form of compensatory damages, punitive damages, or attorneys’ fees. The amount of relief awarded is determined on a case-by-case basis.
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