Testing Securities Market Efficiency with Cammer Factors

05 February 2019
Dr. David Tabak

In “Testing Securities Market Efficiency with Cammer Factors,” published in Law360, Dr. David Tabak uses the 2018 performance of S&P 500 Index members to provide benchmarks for the often-cited Cammer tests. The Cammer factors are based on the 1989 case Cammer v. Bloom, which laid out five factors that would help establish that a security traded in an efficient market—the most common means by which plaintiffs seek class certification. There are no clear benchmarks for how securities should perform in tests of Cammer factors, and existing benchmarks in case law are often arbitrary. Dr. Tabak examines members of the S&P 500 Index, stocks that would be expected to trade in an efficient market, to establish benchmarks that provide some basis for evaluating the relative performance of stocks on the Cammer tests.