Pollsters and hedge funds profit from inside information on EU referendum vote
On the night of June 23, 2016, as the polls closed Britain's Sky News broadcast what sounded like a concession statement from Nigel Farage, the leader of the campaign to leave the EU, plus a YouGov exit poll indicating that the country had voted to remain; over an hour later, Farage reiterated his concession to the Press Association. The combination pushed up the pound on the world's foreign exchanges. A few hours later, when the true result was announced, the pound crashed - but in between a group of hedge funds were able to leverage critical advance information bought from YouGov and at least five other polling companies to gain hundreds of millions of dollars from short-selling the pound. Under British law, releasing exit-poll data to any section of the public before voting ends is illegal - and while Farage was making his statements of defeat he was in possession of information showing that the vote was much closer than the public believed. The idea is believed to have originated with the 2014 Scottish independence referendum, when hedge fund executives told the polling companies they would pay handsomely for a half hour's advance notice of the results, knowing they could leverage it to profit from the market's moves.
Survation, one of the biggest pollsters, denied that it had given market-moving polling data to Farage and claimed it is legal give exit polling data to private clients. In addition, Arron Banks, the founder of Leave.EU, said he had given data to Farage earlier in the day that was released when the polls closed showing that Leave had won 52-48.
An investigation by a House of Lords select committee looked into the question of how the polls could have been so wrong, but did not look into the relationship between pollsters and hedge funds. In June 2018, after a Bloomberg report revealed the connection, George Foulkes, a Labour member of the House of Lords, called for a Parliamentary inquiry into pollsters' practices and statutory regulation. Pollsters have since said they believe the EU referendum vote created one of the most profitable single days in the history of polling. A second referendum would offer a new opportunity.
writer: Cam Simpson, Gavin Finch, and Kit Chellel; Henry Mance
Publication: Bloomberg Businessweek; Financial Times
Publication date: 2018-06-25; 2018-06-29