I picked up Bloomberg’s Business Week in the airport lounge at the weekend. It always has interesting reading, but this one stood out because of the front-page cover.

Of course, it should have occurred to me that Brexit was a great way to make money, and the article outlines how hedge fund managers made millions out of June 23, 2016. What it doesn’t say explicitly, but implies heavily, is that Nigel Farage himself made millions. He did this by saying that the Remainers had won, conceding defeat on the evening of June 23rd, whilst being fully aware that it was far more likely that the Leave campaign had won. He could have known this through a raft of private exit polls procured by hedge funds that showed the true state of affairs. As a result, the pound sterling was shorted at $1.50, knowing that it would likely drop to just $1.32 overnight.

Now, Bloomberg’s Business Week does not have the specific proof that Farage did this, or they would have explicitly said so, but they make it seem likely. Here’s my shortened version of their lengthy analysis (over 6,000 words). You can make your own mind up:

The Brexit Short: How Hedge Funds Used Private Polls to Make Millions

Private polls—and a timely ‘concession’ from the face of Leave—allowed the funds to make millions off the pound’s collapse.

At 10 p.m. on June 23, 2016, Sky News projected the words “IN OR OUT” across the top of a London building as an orchestral score ratcheted up the tension. “In or out—it is too late to change your mind,” declared Adam Boulton, the veteran anchor, seated in a makeshift studio across from Big Ben. “The polls have closed in the U.K.’s historic referendum on EU membership.” Election nights are major productions for British broadcasters, but Brexit was bigger, with Sky viewers watching worldwide.

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After the dramatic intro, Boulton jumped straight in with a huge exclusive, declaring he had “breaking news.” Nigel Farage, the global face of the Brexit campaign, had given Sky what sounded like a concession. His photo and a statement filled the screen, as Faisal Islam, Sky’s political editor, read Farage’s words aloud: “It’s been an extraordinary referendum campaign, turnout looks to be exceptionally high and [it] looks like Remain will edge it. UKIP and I are going nowhere and the party will only continue to grow stronger in the future.”

In the next segment, Boulton delivered another exclusive. Joe Twyman, head of political research for YouGov, one of the U.K.’s most prominent polling firms, appeared on set with the results of an online exit poll conducted for Sky. He explained that the firm had been tracking the same voters—and they had moved farther into the Remain camp that day. Based on that, Twyman said, “We now expect that the United Kingdom will remain part of the European Union. It’s 52 percent Remain, 48 percent Leave, so it’s still close and it’s still too early to know definitely—but, based on the figures that we’re seeing, based on the trends that have occurred, and based on historical precedent—we think that Remain are in the strongest position.” As in past elections, Twyman added, voters had embraced the status quo on Election Day.

Just four minutes after the polls had closed, and with meaningful vote counts still more than two hours away, Sky had aired a concession from the world’s most prominent Brexit backer, buttressed by data from YouGov. In a few hours these “scoops” would prove spectacularly wrong, but in the meantime they spawned worldwide headlines, including from Bloomberg News and virtually everyone else. This one, which ran atop the U.K.’s leading news site, the Mail Online, was typical. Referring to Farage’s UK Independence Party, it read:

BREAKING NEWS: UKIP leader Nigel Farage sensationally concedes DEFEAT within seconds of voting closing as final poll gives Remain the edge 52% – 48% in historic EU referendum

The news pushed the U.K.’s currency up—herding investors toward a cliff, hours ahead of one of the largest crashes for any major currency since the birth of the modern global financial system. Trillions of dollars in asset values would be wiped off the books, but not just yet.

At 10:52 p.m., the pound rose above $1.50 and reached its highest mark in six months. A few minutes later, Ed Conway, the Sky News economics editor, appeared before a giant screen showing the spike. The pound had been tracking polls for months, Conway explained. Whether they were on couches in London or at trading desks in Chicago, people watching Sky or reading headlines sparked by its coverage had every reason to think Remain would prevail. But not quite everyone.

Behind the scenes, a small group of people had a secret—and billions of dollars were at stake. Hedge funds aiming to win big from trades that day had hired YouGov and at least five other polling companies, including Farage’s favorite pollster. Their services, on the day and in the days leading up to the vote, varied, but pollsters sold hedge funds critical, advance information, including data that would have been illegal for them to give to the public … the law is clear: It would have been a violation if, prior to the polls closing, “any section of the public” had gotten the same data the pollsters sold privately to hedge funds.

One person with questions still to answer is Farage, a former commodities broker who also went to work for a London currency trading company after he moved into politics. He twice told the world on election night that Leave had likely lost, when he had information suggesting his side had actually won. He also has changed his story about who told him what regarding that very valuable piece of information.

Bloomberg’s account is based in part on interviews over seven months with more than 30 knowledgeable current and former polling-company executives, consultants and traders, nearly all of whom spoke only on the condition they not be named because of confidentiality agreements. Pollsters said they believed Brexit yielded one of the most profitable single days in the history of their industry. Some hedge funds that hired them cleared in the hundreds of millions of dollars, while their industry on the whole was battered by the chaos Brexit wrought in global financial markets. Although confidentiality agreements have made it difficult to discover the identities of many of the hedge funds that bought exclusive or syndicated exit polls, at least a dozen were involved, and potentially many more, Bloomberg found.

The private exit poll that appears to have had the most clients was conducted by Farage’s favorite pollster and friend, Damian Lyons-Lowe, whose company is called Survation. It was sold to multiple clients and correctly predicted Leave, according to Farage and other sources familiar with the results. In an interview with Bloomberg, Farage said he learned of Survation’s results before making at least one of two public concessions that night, meaning there was a good chance he was feeding specious sentiment into markets …

Lyons-Lowe, a former hedge fund salesman, started Survation in 2010, in part to gauge the public’s support for contestants on Simon Cowell’s X Factor so he could wager on the outcome, according to two people familiar with Survation’s business. The company got its big break in political polling when it was hired by Nigel Farage and UKIP after its surveys showed more support for the anti-Europe party than those of more established pollsters. “I learned more in one lunch with him about polling than I’d learned from anybody in 20 years,” Farage recalled of their first meeting, held before a 2013 election.

The organizations grew so close that Survation once based its phone operators in UKIP headquarters, according to a knowledgeable source, and Lyons-Lowe became a friend and key adviser to Farage. “He is a genius—flawed, but a genius,” Farage said of Lyons-Lowe in his interview with Bloomberg, declining to elaborate.

On June 23, the day of the EU referendum, Farage and his team gathered at the London home of a UKIP adviser. Their actions that day have been retold in two books. The Bad Boys of Brexit is an insider account penned by Arron Banks, a main financier of Farage’s unofficial Leave campaign who was with the UKIP leader that day. The second account is contained in All Out War: The Full Story of How Brexit Sank Britain’s Political Class, by journalist Tim Shipman. It is based on an interview with Chris Bruni-Lowe, who was Farage’s chief political adviser and was with Farage and Banks on June 23.

The published accounts differ, but both say that Farage had learned the results of an unidentified, financial-services exit poll well before the polls closed at 10 p.m. These accounts also say that Farage learned the results before giving his concession statement to Sky at roughly 9:40 p.m., which the network then aired within seconds of the polls closing at 10 p.m.

Farage, who had not detailed since that night what he learned or how he knew it, told Bloomberg that the only external exit poll results he received on June 23 were Survation’s—and that Lyons-Lowe gave them to him. “He got it right,” Farage said of Lyons-Lowe. “And whoever, whichever clientele, whichever City hedge funds paid him that day, did very well out of it.” Others with knowledge of the results also said that Lyons-Lowe’s hedge fund exit poll accurately called the vote for Leave.

Farage, however, repeatedly told Bloomberg that he learned the results from Lyons-Lowe’s poll only “minutes after” Sky put his market-moving statement on the air just past 10 p.m.—not before. “That would have been, that would have been—for he and I to have spoken ahead of that 10 o’clock—would have been wrong at every level. Wrong for me, wrong for him, just would have been wrong,” Farage said.

After saying he heard the results from Lyons-Lowe, Farage then changed his story, saying they came not from Lyons-Lowe personally, but from someone affiliated with Survation’s operation.

In a subsequent telephone interview, Farage again changed his story to say he had indeed spoken by phone with Lyons-Lowe. He said Lyons-Lowe intimated that the U.K. had voted for Leave, but he didn’t share specific data. Farage also said that, at the time, he didn’t believe what Lyons-Lowe had told him, and that another contact, whom he declined to identify, mentioned other polling showing Remain would win …

Farage called his statement to Sky “a terrible mistake,” but he also asserted that he did not give the network’s reporter a true concession. “It was an acceptance that we might not win, but it was hardly, but it was not how—they [Sky] overegged it. They overegged it. But that’s journalism,” he said.

What Farage could not explain, however, is why he gave a further concession about 70 minutes after the Sky broadcast, which not only echoed the statement aired on Sky, but was more adamant. In it, he also specifically cited a financial-firm exit poll as his reason for conceding.

Farage made the second concession in an interview with the Press Association, a U.K. news cooperative. Its report says: “Mr. Farage told the Press Association: ‘I don’t know, but I think Remain will edge it, yes. The massive increase in voter registration will be the reason for that.’ Asked if he was just experiencing election-night jitters, the UKIP leader replied: ‘It is a calm and rational feeling. If I am wrong, I would be thrilled. But it is what we have seen out and about, and what I know from some of my friends in the financial markets who have done some big polling.’” Bloomberg sent a series of headlines from that interview to its more than 300,000 financial clients around the world.

Farage rejected the idea that his concessions were aimed at moving the markets for anyone. But he also laughed about helping to push the pound higher ahead of its crash, a role he seemed to relish. “Yeah, and a good thing—good thing,” he told Bloomberg, adding that those “who trade short-term markets and lose money shouldn’t complain, because that’s the game. That’s the game.”

It’s an interesting article, with much more breadth and depth on what was happening than my shortened version here. Recommended reading. Of course, the claim that Farage’s erroneous statement of defeat made his mates millions has been made before:

The Brexit-supporting hedge fund manager Crispin Odey made £220 million and was filmed by a BBC documentary crew saying: “The morning has gold in its mouth.” Mr Farage’s director of communications in Brussels, Hermann Kelly, reportedly earned £9,500 by shorting the pound against the dollar on referendum night to double his money after five hours. But questioned about the sequence of events for a new book by Sunday Times political editor Tim Shipman, Mr Farage insisted his premature concession had been the result of genuine pessimism. He laughed off the suggestion it had been part of a cunning ploy to help make a lot of money for those who had shorted the markets in the hope of a Brexit victory. Mr Farage told Mr Shipman: “No, no, no, no. I wasn’t shorting it — I should have done!”

… and, according to most media, he probably did.

Posted on: July 10, 2018