| Punitive damages substantially impose a higher amount of damages than the compensatory one. However, the facial “extra compensation” operates virtually to compensate the victims as well as the society as a whole, for their intangible loss hidden behind the conspicuous actual damage. As is well accepted, one of the fundamental functions of punitive damages is compensation, by means of which the goals of both deterrence and retribution are well served. Among several inherent chronic diseases of the stock market in China as well as in any other country, the worst and most hazardous is insider trading, which by depriving the other investors of their legitimate profits or shifting the tort-feasors’ imminent loss upon the other investors, exploits the general investors so severely as to unbalance the stock market, jeopardize not only the functions of fund collecting, capital asset pricing and capital disposing, but also the faith and incentive of the general investors. So grave is the intangible loss brought about by the insider trading that itself thereafter suffices the social damage, which is not adequately recognized and covered by both the traditional tort law theory and current law practice. The punitive damages can offer the most efficient and effective alternative to negate the impact brought by the threat of adversely substantiating the tortfeasor’s right to trample over the others, which couldn’t be more manifest in the cases of insider trading when the dominant tort-feasors exert their overwhelming influence upon the helpless general investors. To be specific, the victims are entitled to plead for damages as much as several times of the profit gained or the loss avoided by the insider traders. Only by this way can the law realign the balance, restore the order of the stock market, address the transaction security, promote the prosperity of the financial system, then eventually facilitate and protect the general investors. |
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