Final answer:
A defrauded purchaser of securities is entitled to damages measured at the time of purchase, and the damages are generally compensatory rather than punitive or speculative. Damages aim to make the buyer whole and are not considered sunk costs.
Step-by-step explanation:
In matters of securities fraud, the way to measure a defrauded purchaser's damages is generally based on the difference between the value paid and the true value of the securities at the time of the purchase. This measurement is meant to place the buyer in the position they would have been in if the fraud had not occurred. Punitive damages might be awarded in certain cases to discourage further fraud, although this is not the primary form of damages for securities fraud.
Damages are not typically measured at the time when the fraud is discovered nor are they considered sunk costs, since the aim is to remedy the harm caused by fraud. Damages also do not include speculative elements; they must be directly tied to the harm incurred due to the fraud.