(Bloomberg) -- U.K. lawmaker George Foulkes said hedge funds use of private polling data to bet on the outcome of the 2016 British referendum was a "scandal," and called for an investigation into practices revealed in a Bloomberg report.
If "any section of the public is given information which is not publicly available it is a criminal offence," said Foulkes during a debate in parliament on Tuesday. "Action needs to be taken."
In the June 25 report, Bloomberg revealed that hedge funds bought private polling data from at least six companies before and during the Brexit vote to gain advance information on the likely outcome, including data that would have been illegal for them to give 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 closed at 10 p.m.
Some hedge funds gained confidence, through private exit polls, that most Britons had voted to leave the EU, or that the vote was far closer than the public believed. Pollsters provided the information while voting was still underway and hours ahead of official tallies. The hedge funds were in the perfect position to earn fortunes by short selling the British pound. Others learned the likely outcome of public, potentially market-moving polls before they were published, offering surefire trades.
“The polling companies were party to this and they need investigation,” said Foulkes, a Labour member of the upper House of Lords, and the driving force behind the select committee that looked into pollsters. "The hedge funds were party to this and they need investigation."
Foulkes called for the committee on polling to be reconvened because lawmakers weren’t aware at the time that hedge funds were buying private polling.
Jeffrey Rooker, another member of the upper chamber, also called Tuesday for an investigation of, and regulation of, the conflicts between the public work of pollsters in the press and their undisclosed, simultaneous work for hedge funds, saying it involved market manipulation.
©2018 Bloomberg L.P.