Were the Leave campaign’s proven lies told not purely to win the referendum but – arguably – for 300 hedge funds to make significant financial gains from the result?

With widespread indignation surrounding the way in which the referendum outcome was secured mounting, a vast tract of the British people are asking why the referendum has not been annulled.

It is clear, following the Electoral Commission findings – beyond reasonable doubt – that the Leave victory was procured by corrupt and illegal practices, which, ordinarily, would render the result void and a rerun organised.

To date, knowledge of those unlawful practices and the lies disseminated on an industrial scale during the campaign, have failed to restore the democratic process or uphold the rule of law. As such, divisions created by the referendum are set to become entrenched and endure.

We have witnessed the lies told with impunity by politicians and activists during the 2016 campaign going largely ignored. The potential for malfeasance or Misconduct in Public Office aside, ordinarily such lies are not actionable in our courts.

However, if someone lies for financial gain during an election or referendum campaign, that can potentially amount to fraud under the Fraud Act 2006. In particular, fraud by false representation (section 2) and fraud by abuse of position (section 4).

In 2009, the Lisbon Treaty referendum in Ireland, alerted hedge fund managers to the prospective use of referendum campaigns as mechanisms for financial gain.

Controversy erupted when it materialised that financial backing of anti-EU campaigners came from hedge fund managers while some hedge funds had taken out specific bets on the insolvency of the country if the Irish people returned another no vote. A similar tactic was adopted by hedge funders during the 2016 referendum who made billions of pounds adopting the ‘short position’ on the outcome.

Some hedge fund companies were ardent for the UK to break ties with the EU following anger at the Alternative Investment Fund Managers Directive (2011/61/EU), which was designed to regulate hedge funds for the first time in response to the 2008 financial crisis.

Historically, they had traded without extensive regulations and lacked transparency. Michel Barnier, the European Commissioner for Internal Market and Services at the time, introduced the rules in order to re-introduce financial stability back into financial markets and create transparency so as to avoid another major financial crisis.

Not surprisingly, numerous hedge funders were opposed to those provisions. This article considers the idea that such companies colluded during the 2016 EU Referendum to both rid themselves of those regulations by leaving the trade block and make substantial financial gains in the process.

Short Positions

A short position (or a short) has nothing to do with duration or length, rather it is a reference to who owns shares and those who use others’ shares to make a profit.

When investors take the long position, they have bought and own those shares of stocks in the hope that they will make a profit in the long term. The long position is the more conventional practice for traders and investors as the risks are considerably lower than going short.

A short is produced when a trader sells a security first – without owning it – with the intention of rebuying it or covering it later at a lower price. There are two different types of shorts: naked shorts and covered shorts. Naked shorts refer to traders selling a ‘security’ without owning it who pocket the difference in price; a covered short refers to traders who borrow shares from a City investor who, in turn, charges a fee (a borrow-rate) for the service.

By adopting a short position the trader has both a finite potential to turn a profit and infinite potential for losing their investment. It is a very risky strategy.

One of the risks is the potential for a short-squeeze where a heavily shorted stock unexpectedly starts to increase in price (as short traders begin to cover the stock). An infamous short-squeeze happened in 2008 when the shares of Volkswagen surged higher as short-sellers clambered to cover their shares: the stock rose from approximately €200 to €1000 in just over a month.

A short is essentially a gamble: someone is hedging a bet that the value of a stock will decrease in the short term, perhaps in a matter of days or weeks, and stands to lose the entire investment if the anticipated decrease does not materialise.

Despite the risks, around 300 hedge funds adopted the short position anticipating that the 2016 EU referendum would return a leave vote and result in the price of UK stock decreasing in value.

There would have been an added bonus if the prices surged higher rapidly just before the plunge. It may come as no surprise that around 300 hedge fund companies were represented by Vote Leave during the referendum campaign and they formed the biggest demographic of their membership.

Vote Leave’s hedge fund membership

We all know that Vote Leave and other Leave campaigns adopted a strategy of intemperate misdirection to pervert and demonise the EU and its institutions. The European Law Monitor has published evidence that highlighted the scale on which Vote Leave lied about issues such as immigration, Turkey, the cost of EU Membership, and future euro bailouts. It is difficult to reconcile the scale of the lies with the notion of simply winning the referendum.

There are few, if any, coincidences when it comes to Brexit.

In my experience of researching the fallout following the referendum, I have come to the conclusion that there are few, if any, coincidences when it comes to Brexit.

The sheer scale of the lies told and the degree of collusion between Leave campaigns and their donors to win at all costs (including breaking electoral law) is suspicious to say the least. The vast sums that were made by individuals and companies off-the-back of the referendum outcome is common knowledge and has been widely reported.

Simple deduction tells us that findings have revealed something more than just breaches of electoral law.

Certainly, the 900 plus documents sent to the Metropolitan Police and National Crime Agency by the Electoral Commission naturally raises suspicions further about the Leave campaigns’ conduct that go beyond electoral infractions. Essentially, the Commission has discovered evidence beyond its remit and have referred that evidence to the relevant authorities. Simple deduction tells us that findings have revealed something more than just breaches of electoral law.

This presents us with the presumption that the lies told during the 2016 EU referendum campaign by Vote Leave (and others) were not purely to win the referendum but – arguably – for some to make significant financial gains from the result.

The primary group that the Vote Leave campaign represented was hedge fund companies, who, in return, provided major donations to the cause. In fact, Vote Leave was established by hedge fund managers and City traders. The collective membership of both City for Britain and the Business Council for Vote Leave equated to approximately 300 hedge fund companies.

Those organisations and their subsidiaries were subsequently party to privileged inside information regarding the Vote Leave campaign and, more importantly, to its progress.

With such unprecedented access to vital campaign information, hedge funders who were members of Vote Leave were confident enough to adopt the risky and unusual short position, despite the polls being so close it was difficult to call the result.

Crispin Odey – La mattina ha l’oro in bocca

An example rests with Crispin Odey – a founding member of City for Britain – who was part of Vote Leave and one of the largest donors to the Leave campaign. Odey (Rupert Murdoch’s ex-son-in-law) made £220 million on the night of the EU referendum by adopting the short position on the result. He was not alone. Indeed, 85% of the UK based hedge fund companies that went short on the result of the EU referendum (between April and June 2016) were directly or indirectly connected to hedge funds who were part of the Vote Leave campaign. They collectively made hundreds of millions of pounds, Euros and dollars following the referendum result.

Vast sums were gambled on a Leave victory by Vote Leave hedge funders and they stood to lose considerable amounts (everything in some cases) if the vote had gone the other way.

How the hedge fund driven Brexit vote wiped out over two trillion dollars of value from worldwide markets:https://t.co/DiyE7qCltl — Brexitshambles (@brexit_sham) May 5, 2019 Exhibit A

If we weigh up the amount they stood to lose financially, if the UK had voted to remain, against how much they stood to gain financially, if the country returned a Leave vote, then it begins to make much sense that some unscrupulous Brexiters were prepared to risk breaching electoral law and data protection law, even financial fraud to attain the result they needed. With such sums involved, it would have been imperative to secure a Leave vote at any cost.

We know that Vote Leave broke numerous laws to achieve the result they needed, which have gone largely unpunished (in the absence of completed Met Police and NCA investigations) as only fines have been imposed until now. We wait to see whether lying to the electorate will result in criminal prosecutions with adequate redress.

However, if it can be proved that those lies were told for financial gain the Brexit house of cards is likely to tumble. Whereas politicians, lying to or misleading the electorate during a campaign, are likely to escape criminal sanctions, anyone who lies with the intention of making a financial gain in those circumstance may well see themselves indicted for fraud.

Market manipulation

One could contend that Vote Leave and other Leave campaigners lied to the electorate in order to manipulate the market through insider dealing. If such allegations can be substantiated, this could amount to criminal and/or civil offences. Under EU law, the EU Market Abuse Regulation has the effect of making insider dealing, unlawful disclosure, market manipulation and attempted market manipulation civil offences. Under UK law, however, insider dealing is a criminal offence under the Criminal Justice Act 1993 (Part V), whilst market manipulation is a criminal offence under the provisions of the Financial Services Act 2012 (sections 89-91).

There was an illusion of rivalry between different Leave campaigns leading up to and during the referendum campaign but it is difficult to dismiss the possibility that they acted in concert to make financial gains. We know for a fact (from the Electoral Commission, DCMS and ICO investigations) that Leave campaigns were found to have been ‘working together’ during the campaign in 2016. We also know that there were close ties between Vote Leave, Leave.EU and Go Movement.

Leave Campaigns Working Together During the 2016 EU Referendum

The Tangled Web

Vote Leave’s campaign, initially registered by William Norton at 55 Tufton St, was directed by Matthew Elliott out of an office in Westminster Tower, 3 Albert Embankment, London, which is also the registered address for Fox Business Network, owned by Rupert Murdoch, and the registered address of a number of businesses owned by Richard Tice, who was a key player in Leave.EU and went on to establish Leave Means Leave, also at 55 Tufton St. Tice, along with Aaron Banks, Andy Wigmore and Jim Mellon are men who owe part of their wealth to working in the City and financial services and would have known a number of the hedge fund managers who were part of Vote Leave.

March 2017 – Arron Banks Admits to Using AI to Predict the 2016 Referendum Result

The Go Movement was primarily UKIP. Its frontman was Nigel Farage who worked in the City as a commodities broker, in consequence he is also familiar with the key players in the City. One commonality between all three groups is the City.

One commonality between all three groups is the City.

Another was the extensive use of data analytics and artificial intelligence. It has been previously stated that there are few, if any, coincidences when it comes to Brexit. Some of the most curious ‘coincidences’ surround the involvement of Vote Leave and Leave.EU with companies outside UK jurisdiction which have direct or indirect associations with the then CEO of the world’s most successful and foremost tech driven hedge fund company, Renaissance Technologies, Robert Mercer, a computer scientist who had developed algorithms and artificial intelligence to power the $60,000,000,000 fund before resigning and taking an advisory back seat role over his far-right political views which saw him support Trump and Brexit through his involvement with Delaware based Cambridge Analytica, a joint venture with British military contractor SCL Elections whose CEO, Alexander Nix, was somewhat less than candid to parliament when questioned.

The Mysterious Money Flowing Through Cambridge Analytica

With Mercer’s investment bagman Steve Bannon, being both CEO of the American ‘Cambridge Analytica’ and Executive Chairman of right-wing news outlet, Breitbart; both are linked to Vote Leave through the strange association between AggregateIQ and Cambridge Analytica, and both are close associates of Nigel Farage.

Farage, Mercer, Bannon

Nigel Farage, well known for keeping those he trusts close, was unperturbed by a number of his key staff working for and/or belonging to so-called rival organisations.

For instance, Robin Birley is a member of UKIP and a donor; Richard Norton (Lord Grantley) is UKIPs only member in the House of Lords; Andrew Smith was the company secretary for UKIP for a number of years; David Stevens (the Deputy Chairman of Express Newspapers) was a member of UKIP, and a Director of Go Movement: all these central UKIP figures were part of Vote Leave during the 2016 campaign. Douglas Carswell and Suzanne Evans are both key figures of UKIP but, during the campaign, they were directors of Vote Leave. Suzanne Evans was Deputy Chairman of UKIP from 2014-2016. Coincidence? Perhaps. Then again, with individuals such as John Stuart Wheeler being both a major donor of UKIP and Vote Leave (he donated £619459 to Vote Leave) the excess of clear ties between ‘rival’ groups begin to look less and less like happenstance.

Other evidence of synchronised efforts between the different Leave campaigns has been established. For instance, all the branding for Grass Roots Out, Go Movement, the DUP, Leave.EU, UKIP, and Vote Leave was carried out by just one company, Soopa Doopa Branding. In fact, the evidence has been always been there that Leave campaigns were ‘working together’ during the campaign. Who else were fined for the offence?

Electoral Commission files demonstrate that there was a clear-cut connection between the pro-Leave groups and their wealthy donors. Considering that they were targeting a specific answer to a binary question on the ballot paper, we would be in the territory of believing in unicorns if we were to believe that these groups were not involved in joint campaigning.

It must be remembered that the term ‘working together’ (also known as ‘joint campaigning’) is actually an offence under electoral law; it is not just an innocuous phrase. Its definition is ominous in the context of this discussion.

Whilst there is a major failing in the law because financial donations to another campaign are not deemed as ‘working together’ (thus allowing donors to concentrate their resources to where they are needed at the right time), when campaigners spend money with other campaigners as part of a coordinated plan or arrangement ‘that is intended to, or is otherwise in connection with, promoting or bringing about a particular outcome’ it is an entirely different matter.

It has already been proven – to the criminal burden of proof – that certain Leave campaigns worked together (for reasons beyond the scope of this paper) but the important question now is whether they worked together for financial gain. If so, indictable crimes (with potential prison sentences) have been committed, not to mention any rational claim that the result must be respected dispersed.

We have to think about that infamous announcement made by Nigel Farage on the night of the referendum when he conceded defeat early on. There was something unusual about that statement. The Bloomberg’s article “The Brexit Short: How Hedge Funds Used Private Polls to Make Millions’ claimed Nigel Farage’s yielding had a direct impact on share prices rising in reaction to that news, only for prices to significantly decrease once the real result was returned.

An Ecstatic Farage Celebrates as the Pound Crashes on Referendum Night

That initial rise, followed by the prices plummeting once the result was announced, equated to hedge funds that went short making substantial financial gains. It goes without saying that if a member of the designated Leave campaign (Vote Leave) had conceded early that night it would have raised eyebrows (as well as share prices temporarily) but as Nigel Farage made the announcement, it went unnoticed.

Selling the Lie

Hedge fund companies had neither the resources nor political influence to campaign successfully for the Leave result needed to pull off the financial coup. They needed someone to take responsibility for deciding what message would be successful and then deliver that message. That role was eventually filled by the Campaign Committee of Vote Leave and the Board of Vote Leave; as members of Vote Leave they had influence. Those on the Committee and Board included Liam Fox, Michael Gove, Chris Grayling, Andrea Leadsom, Boris Johnson, Nigel Dodds, Dominic Raab, IDS, Gisela Stuart, Graham Stringer and Steve Baker.

The internet is full of information regarding the profits that were made by Vote Leave hedge fund companies. That evidence is essentially a retrospective look at the extent that those companies stood to gain if the Campaign Committee and Board successfully persuaded enough people to vote to leave.

By being both members and donors, hedge funders could now capitalise on their influence from their new found resources and political clout. Vote Leave could have decided to run a completely honest campaign but chose, instead, to mislead the public on an industrial scale.

Vote Leave Chose to Mislead the Public on an Industrial Scale

We should ask ourselves why they took that decision. We are unlikely to get that answer without a full-scale independent inquiry, or from the potential trials that may ensue Met Police and NCA investigations. However, without seeing the evidence it is impossible to say.

One way or another, there is a need for clarity concerning many controversies surrounding Brexit, but the issue of potential false representation for financial gain, by a designated election campaign, demands such clarity, particularly as other serious crimes could have been committed.

As a country we cannot afford to ignore that possibility. If it were only to quash any allegations, the relevant authorities need to investigate fully. In the interest of starting the process of healing divisions over Brexit, the referendum result must be legitimised.

Until 2015, EU membership had consistently failed to register highly as an issue felt to be important by voters in the UK. Just four years later, Brexit exhausts main stream media and is poised to adversely alter millions of peoples’ day-to-day existence if it is implemented.

The UK’s membership of the EU is set to dominate the political arena for the foreseeable future. What is clear is the 2016 campaign instigated deep divisions among the British people and wounds have been opened that most its citizens were blissfully unaware of prior to the Brexit debate. At this moment in time, a substantial cross-section of the UK population are deeply concerned that we arrived here following an ill-conceived and illegitimate referendum, that was only legislated to be a consultation, and are asking questions.

If the referendum result has any chance of being respected, following findings that the result was procured by ‘corrupt and illegal practices’ and the lies that were told to secure a Leave victory, questions posed by the evidence require answering.

With assurance, we need clarity that serious criminal activity did not drive the country into political, constitutional and social crisis.

With assurance, we need clarity that serious criminal activity did not drive the country into political, constitutional and social crisis. Living under the rule of law is not a nine-to-five existence where you can take the weekend off. Criminal law refers to behaviour regarded as worthy of public condemnation through the creation of offences. If such offences are ignored and not enforced the foundations of a democratic society will collapse. Those who insist the referendum should be respected need to take a lesson in respect and demonstrate to those who are rightfully concerned that we still live under the rule of law and have not been demoted to status of a ‘banana republic’.

Post Script – a call for action.

As a post script there is something we should consider. Putting the breaches of electoral law aside for one moment, we need challenge not just the legitimacy of the 2016 referendum but the manner in which it was legislated, run and scrutinised. The fact that referenda are rare in the UK should have raised alarm bells on such a vital issue. Quite simply, our indirect, representative parliamentary democracy is not geared for sovereign decisions (that change the legal order, constitution and abrogate rights) to be delegated to the electorate; particularly if basic safeguards are excluded during the legislative process on the basis of it being advisory. Remember the franchise was also reduced significantly on that basis. The cruel absurdity of the advisory nature of the outcome is that it has no legal effect and cannot be voided.

Countries who do use direct democracy – like Switzerland – have a system devised to ensure the democratic process. Indeed, the Swiss Supreme Court has just annulled a nationwide referendum on the grounds that the information given to voters was insufficient. The incomplete detail and a lack of transparency, before the ballot took place, was held to violate the freedom of the vote, which could now be re-run.

If countries who do use referenda regularly will set aside a referendum result for violating the freedom of the vote simply because a lack of information and transparency, what would they do if the result was secured by corrupt and illegal practice following a campaign founded on lies? Rhetorical question, of course! The real question is: how do we reconcile the EU Referendum with the requirement for a lawful, free and fair vote with the lies that were told, the findings of illegality to date and such vital questions left unanswered?

This is a call for action. That call is – perhaps – prompted by the Prime Minister’s dealing of the Gavin Williamson affair that culminated in his sacking as Defence Secretary. I have no idea whether the former Royal Marine actually breached the Official Secret Act 1923 and leaked National Security Council information but it appears he has been tried by a ‘kangaroo court’ and summarily executed. As the PM deems the ‘matter closed’, alarm bells are ringing loudly. It appears that due process and the rule of law have become fanciful soundbites at the heart of the Executive over the last three years. The PM has no right to decide who is subject to the criminal justice system.

Tom Watson on the Leaked National Security Council Information

In Tom Watson’s words, from his urgent question to the Prime Minister in Parliament:

‘In what world is it acceptable that the Prime Minister should be the arbiter of whether a politician she believes is guilty of criminal conduct in office should face a criminal investigation?’

A man has protested his innocence in the face of being told that there is strong evidence that he has committed a crime. The situation demands a criminal investigation to ascertain guilt or innocence. Where is the justice when a politician believes she has the discretion to bypass the criminal justice system and formerly close the matter herself after firing a Minister of the State?

Is this flagrant abuse of power and the stalled NCA and Met Police investigations into Vote Leave – among others – indicative of a transition from a democratic to an authoritarian regime, where obedience to authority is favoured at the expense of personal freedom and the right to a fair trial? I would argue that Pandora’s Box has now been officially opened.

In the context of this article, the people of the United Kingdom need answers. Fast. We need to demand action and force the completion of the National Crime Agency and Metropolitan Police investigations, and the opening of an investigation by the Financial Conduct Authority. As European Citizens could have been directly affected by fraudulent market abuse, an inquiry is also required by the European Securities and Market Authority.