Punitive Damages in Securites Arbitration: The Interplay of State and Federal Law (or a Smaller Bite of the Big Apple)

As the United States Supreme Court has observed, the Federal Arbitration Act (FAA) 2 "is something of an anomaly in the field of federal-court jurisdiction. It creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate, yet it does not create any independent federal-question jurisdiction."' The parameters and effect of state law under the FAA are continually being refined by the courts. Since the FAA is silent regarding the award of punitive damages, the role state law plays with respect to this issue is unsettled.