Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Sunday, January 11, 2009

Choi & Eisenberg on Punitive Damages in Securities Arbitration

Punitive Damages in Securities Arbitration: An Empirical Study, by Stephen J. Choi, New York University - School of Law, and Theodore Eisenberg, Cornell University - School of Law, was recently posted on SSRN.  Here is the abstract:

This article provides the first empirical analysis of punitive damages in securities arbitrations. We report that punitive damage awards occur in a non-trivial fraction of securities arbitrations. Using a data set of over 6,800 securities arbitration awards, we find that claimants prevailed in 48.9 percent of arbitrations, and that 9.1% of those claimant victories included a punitive damages award. We also report that the existence of a punitive damages award was associated with claims that suggested egregious misbehavior and with claims with higher compensatory awards. We test whether securities arbitration results in different punitive damages compared with litigation before juries and judges. The relation between punitive and compensatory awards did not differ substantially between securities arbitrators and data on juries available from periodic Civil Justice Surveys by the Bureau of Justice Statistics. The rate of punitive awards by arbitrators was higher than the overall rates for juries and judges and slightly lower than the rate of punitive awards by juries in cases lacking bodily injury.

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