By Daniel Bettencourt and Steven Feinstein ( November 17, 2017, 11:28 AM EST) -- On Nov. 6, 2017, the United States Court of Appeals for the Second Circuit issued an opinion in Strougo v. Barclays PLC, upholding the district court's certification of the investor class despite purported deficiencies in the plaintiffs' empirical test of market efficiency.[1] The appeals court ruled that the fifth Cammer factor, the direct or empirical factor, "is not always necessary to establish market efficiency." We believe the appeals court got it right. While the empirical factor, examined via an event study, is a powerful tool for demonstrating market efficiency or detecting inefficiency, it has its limitations. While the empirical factor is unique in that it can provide direct evidence of market efficiency or inefficiency, whereas other factors are indirect indicators, the empirical factor also has a unique limitation, as explained herein....