Brexit Polls Used by Hedge Funds Leave Lawmaker ‘Uncomfortable’

(Bloomberg) -- Hedge funds that used polling data to profit from the 2016 Brexit referendum leave an “uncomfortable feeling,” said Nicky Morgan, chairman of an influential committee of British lawmakers.

Other politicians, including Labour Party members George Foulkes and Peter Mandelson, have called for an investigation into the practices revealed by a Bloomberg story on Monday. However, Morgan said in an interview on Tuesday that the Treasury Select Committee has no immediate plans to hold an inquiry.

Hedge funds bought polling data before and during the vote on the U.K.’s EU membership in 2016. It would have been illegal to give some of the data to the public. One pollster sold a private exit poll to a fund that matched the results of a public poll it gave free to Sky News and was aired shortly after polling stations closed at 10 p.m. That effectively gave the fund an edge for betting on the rise in the pound sparked by publication of the survey.

“The difficulty with this is about the fact that people do things like execute trades or take positions before that polling information becomes public,” Morgan said in the interview. “So that’s the funds in this case -- executing trades and taking positions based on information which they know is going to become public but is not yet.”

‘Astonishing’ Practices

Foulkes said the practices revealed by Bloomberg were “astonishing” and that “the case for statutory regulation of polling companies is now overwhelming.” He said he would raise the issue in the House of Lords. Mandelson, another member of the House of Lords, told Bloomberg Television that he would endorse calls for a Parliamentary inquiry.

Alastair Campbell, former Prime Minister Tony Blair’s spokesman and a prominent Remain campaigner, appealed on Twitter for Damian Collins, chairman of Parliament’s Digital, Culture, Media and Sport Committee, to investigate.

Morgan, who had just come from a meeting of her committee, said they hadn’t discussed the issue.

“We’ve got a lot of other things and to be honest it’s pretty much at the fringes of what we would look into,” she said. “The only way would be -- obviously we’ve got our inquiry on economic crime -- but we haven’t discussed it at all."

Unanswered Questions

She said former U.K. Independence Party Leader Nigel Farage had questions to answer and “should explain himself," but declined to go any further.

Farage twice conceded victory to Remain after polling booths closed on referendum day: to Sky News shortly after 10 p.m., and just over an hour later to the Press Association. He told Bloomberg he had learned the results of a Survation exit poll that correctly predicted a Leave victory “minutes after” Sky aired his comments. He has denied having any financial interest in currency movements around the referendum.

“You have the interaction of two things here: one is the polling privately commissioned and used by hedge funds and others, the other is the public statement made by Nigel Farage apparently conceding victory to the Remain side,” Mandelson said. “Now that of course had an immediate impact on sterling and we know how hedge funds subsequently benefited from that.”

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