Should hedge funds be banned from private polling?
Businesses accused of gaming referendum result to make billions in profits
The head of the Treasury select committee, Nicky Morgan, has called for hedge funds to be banned from commissioning private polls and then making huge profits on the stock market when the results go public.
It follows a Bloomberg report that found hedge funds had hired leading pollsters to provide private exit polls and other data on voter behaviour in the run-up to the EU referendum.
Electoral law prohibits pollsters from making their findings public while the voting booths are open, but no laws prohibit the data being passed directly to city institutions for trading purposes.
The Times says this means “hedge funds would be in an ideal position to bet on changes to the pound when the private polling data went public”.
Shorting the pound also “let hedge funds avoid the ensuing crash which led to chaos in the global markets”, says the London Evening Standard.
“Pollsters said they believed Brexit yielded one of the most profitable single days in the history of their industry,” Bloomberg said. “Some hedge funds that hired them cleared in the hundreds of millions of dollars, while their industry… was battered by the chaos Brexit wrought in global financial markets.”
Polling companies that sold data included YouGov, Survation, ICM, BMG and ComRes, “with at least a dozen hedge funds buying the exclusive or syndicated polling data” reports Business Insider UK.
According to one source, YouGov made £760,000 selling a private exit poll to one hedge fund, while several investment firms made in excess of £750 million in the hours after the Brexit vote closed.
Even before the vote there were fears many financiers were looking to cash in on early exit polls.
Bloomberg also raised questions about the referendum night pronouncements of prominent Brexiteer Nigel Farage. The news agency claimed the former leader of Ukip leader had twice said publicly on the night that Leave had likely lost despite having information suggesting that it had won.
It also said that he had changed “his story” about who told him what when.