Punitive Damages in Securities Arbitration: An Empirical Study

64 Pages Posted: 4 Jan 2009 Last revised: 2 Jun 2009

See all articles by Stephen J. Choi

Stephen J. Choi

New York University School of Law

Theodore Eisenberg

Cornell University, Law School (Deceased)

Date Written: January 2, 2009


This article provides the first empirical analysis of punitive damages in 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. The existence of a punitive damages award was associated with claims that suggested egregious misbehavior and with claims that provided higher compensatory awards. The pattern of punitive awards is more consistent with a traditional view of punitive damages that incorporates a retributive component than with a law and economics emphasis on efficient deterrence. We also 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 the securities arbitrators’ data 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.

Keywords: Securities, Arbitration, Punitive Damages

JEL Classification: K10, K22, K40, K41, D74

Suggested Citation

Choi, Stephen J. and Eisenberg, Theodore, Punitive Damages in Securities Arbitration: An Empirical Study (January 2, 2009). Cornell Legal Studies Research Paper No. 1322482, NYU Law and Economics Research Paper No. 09-01, Available at SSRN: https://ssrn.com/abstract=1322482 or http://dx.doi.org/10.2139/ssrn.1322482

Stephen J. Choi

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

Theodore Eisenberg (Contact Author)

Cornell University, Law School (Deceased) ( email )

Myron Taylor Hall
Cornell University
Ithaca, NY 14853-4901
United States

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