Pollsters face crackdown after row over Brexit data
Hedge funds accused of profiting from secret surveys on referendum
OPINION pollsters face a crackdown over fears that hedge funds commissioned secret surveys that helped them make hundreds of millions of pounds by betting on the Brexit vote.
MPs have called for an overhaul of the rules governing polling. It follows an outcry over mega-rich investors who paid for research on the mood of voters as the EU referendum approached.
This information on how the referendum was expected to unfold gave some hedge funds a crucial edge, sparking fears that private polls could undermine the integrity of financial markets.
Polling data bought from Yougov, one of the biggest firms, helped billionaire Mayfair fund boss Crispin Odey make £229m.
Former Ukip leader Nigel Farage has been accused of misleading the markets after conceding Remain would win the vote on the night of the referendum, despite having seen a secret poll which suggested that Leave was heading for victory.
Professor Sir John Curtice, the designer of the exit polls that are aired on television on election nights, gave paid advice to hedge fund Rokos Capital Management as it sought to predict the result.
Nicky Morgan, the Tory MP who chairs the Treasury Select Committee, is now demanding action to protect the markets from hedge funds armed with private voting forecasts.
She has written to Curtice in his role as president of the British Polling Council asking for more transparency in future on how polls are used by investors.
Morgan said: ‘ Polling companies present themselves as neutral observers of public opinion. Yet behind the scenes they are selling private polling data to hedge funds to make profitable trades. The failure to manage this conflict of interest raises doubts over the integrity of the polling industry’s business model, and risks damaging the reputation of UK financial markets.’
There were wild swings in the pound in the run-up to the referendum. On results night, it plunged from $1.50 to below $1.32 in one of the biggest moves ever by a major currency as it became clear that Leave had won.
Before the vote, opinion polls themselves moved sterling as they suggested that either Leave or Remain had an edge.
It meant a hedge fund with advance knowledge of a survey could make a fortune by guessing how the currency markets would respond. One fund commissioned an exit poll by Yougov for £750,000, in a scheme nicknamed ‘Operation Pomegranate’. The results were given to the fund before a later, public exit poll by Yougov which moved the markets when it was broadcast on Sky. The investor who paid Yougov is said to have made a large profit as a result. The scandal over polling data also touched Nigel Farage, who admitted knowing the results of a survey suggesting Leave had won on the night of the referendum before saying in public he thought Remain would be victorious.
This announcement sent the pound higher because many traders believed Farage. A higher pound meant bigger profits for hedge funds betting that it would fall when Leave won. Farage has insisted he did not deliberately mislead the markets to boost profits for friends in the City.
Morgan said she would like pollsters to tell people they canvass that their opinion could be used to make money for private clients. And she called for polling firms to reveal if published polls have been done for free or produced at a discount.
It is hoped this would put them off producing cheap public surveys which are vastly different to expensive ones that stay private.