Category Archives: Finance in politics

The mask of Sergio Moro falls

brasil-moro-bolsonaro

(Tânia Regô – José Cruz/Agência Brasil)

In accepting the invitation to be a Minister for Bolsonaro, the judge’s partiality and political intentions have become even clearer ‘in the eyes of Brazil and of the world’

01/11/2018

In accepting the invitation to be a Minister of Justice for Jair Bolsonaro, Sérgio Moro revealed definitively his partiality as a judge and his real political options. His mask has fallen.

Moro was one of the most visible agents of the political and electoral process. Since the start of Operation Lava Jato (Car Wash) he acted not to fight corruption, but to destroy the Partido dos Trabalhadores (Worker’s Party) and the government running the country. All his actions were meticulously thought to influence this direction.

In 2016 he recorded and illegally leaked private conversations of the President, convicted Lula, without proof and for “indeterminate acts”, performing judicial acrobatics to not follow a judicial order to release him, manipulated the calendar of the process so as to impede a deposition by Lula, in which he could defend himself and publicise a lieful plea bargain from Antonio Palocci on the eve of the first round of the election.

The arbitrary, illegal and partial rulings by Sergio Moro led the UN Committee for the Defense of Human Rights to open a formal procedure on the process against Lula, as well as determining the guarantee of Lula’s political rights, which was not followed by the Superior Electoral Court, in clear violation of international treaties in force.

Moro has always been a biased judge, always acting with political intentions, and this has become clear to the eyes of Brazil and of the world, when he took on a post in the government he helped elect with his decisions against Lula and the campaign of defamation against the PT that he fed, as an accomplice with most of the media.

The judge who acted so strongly against Lula is the same as who benefited those who were really corrupt with Petrobras and their agents, who are now enjoying their freedom or are in semi-open imprisonment, besides the millions they accumulated, in exchange for false depositions, with a clear political bent.

This nomination, where the invitation was made before the first round of the elections, as revealed by Vice-President General Mourão in the Folha de São Paulo newspaper, is one more sign that the future government intends to set up a police state in Brazil.

Adapted from Comissão Executiva Nacional do PT 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Tânia Regô – José Cruz/Agência Brasil)

A matemática do Brasil do Bolsonaro

Bolsonaro e Lula

Foto: huffpostbrasil.com

O que os números e a resolução de equações pode dizer para nós sobre a situação no Brasil? Vejamos os números e os fatores que podem entrar numa equação. Geralmente, o passado tem uma influência no presente e o presente pode nos dizer algo sobre o futuro, mas estes dois aspectos sobre o tempo, o passado e o futuro, talvez terão de ser reavaliadas enquanto movemos através do nosso exame.

Numa equação, temos duas partes, cada uma de um lado de um sinal = ou igual, e temos que alcançar um equilíbrio para assegurar que não tenha erro.

Quais fatores devemos ter em conta nas equações? Números absolutos de cada lado; por exemplo, o montante de dinheiro levado à situação por cada lado, usando um sinal + para fatores positivos e um sinal – para fatores negativos. Os sinais + estão usados para o que sabemos que é real e sinais – para equilibrar o que sabemos que é falso.

Sabemos que no lado direito temos mais dinheiro e que a sociedade acredita que isso é importante. Sabemos que o lado esquerdo está  falando que não tem justiça e portanto que a conta, a votação, está inválida.

O lado direito, geralmente acredita que o dinheiro ou o poder é um direito divino, e que nem todos têm tal direito.

O conselho do lado esquerdo é que devemos nos unir, que temos que lutar, que devemos nos organizar. O conselho do lado direito é que temos que lutar, que temos que nos defender, que devemos destruir e eliminar para sempre as pessoas barulhentas da esquerda.

Até que aqueles na esquerda e na direita possam ouvir o que está sendo dito de ambos os pontos de vista, não teremos paz.

Aquele que está recebendo o conselho, Lula, nunca diz que era da esquerda e sempre escutou os dois lados.

O número 13 é o número que o Partido dos Trabalhadores usa em suas campanhas. Há um mito ou lenda que o número 13 é que dar azar. Não é verdade. Na minha tradição, os padeiros assaram 13 pães em vez de 12 para suprir a necessidade se qualquer situação  desafortunada acontecer, tal como a perda de um ou a queda acidental de um e assim por adiante.

Da mesma tradição, o Partido dos Trabalhadores do Reino Unido sempre buscou a harmonia entre as classes em vez de guerra de classes. Aqueles que ainda acreditam em guerra de classes,  de qualquer lado, estão propagando o que dizem estar contra, desequilíbrio e desigualdade.

Há uma abreviação interessante no português brasileiro sobre o PT. Pode significar ou o Partido dos Trabalhadores ou a Perda Total, que é um termo de seguros para quando um carro está dado como não valendo a pena de reparar depois de um acidente de carro. Este termo entrou na cultura popular com a frase, ‘Vai dar PT’ ou na piada invertida como ‘Não vai dar PT’.

Qualquer um que se considere um trabalhador, ou não trabalhador, também deve pensar sobre o motivo pelo qual um trabalhador se considere excluído ou incluído nessa categoria, e o porquê de qualquer outra pessoa não ser um trabalhador.

Neste tempo,  os brasileiros têm que pensar em perda, em quem ganhou e o que está perdido ou ganho.

The mathematics of Bolsonaro’s Brazil

Bolsonaro e LulaPhoto: huffpostbrasil.com

What can the numbers and resolving the equations tell us about the situation in Brazil? Let us look at the numbers and the factors we can put into an equation.

Generally the past has an influence on the present and the present can tell us something about the future, but these two time aspects, past and future, may have to be reassessed as we move through our examination.

In an equation, we have two sides either side of an equals sign, and we have to achieve a balance to be sure there is no error.

What factors should we take into account in any equations? Absolute numbers on any side, the amount of money brought to bear by either side, using a plus sign for positive factors and a negative sign for negative ones.

Plus signs are used for what we know to be real and negative ones to balance anything we know to be false.

We know the side on the right have more money and that society believes this is important. We know the left side are saying this is not fair and therefore that the count, the vote, is invalid.

The side on the right, generally believe that money or power is a divine right, and that others do not have that right.

The counsel from the left side is we must unite, we must fight, we must organize. The counsel from the right is we must fight, we must defend, we must destroy and eliminate for ever those noisy non-persons on the left.

Until those on the left and on the right can hear what is being said from both points of view, we shall not have peace.

The one receiving the counsel, Lula, never said he was on the left and would always listen to those on both sides.

The number 13 is the number the Worker’s Party uses in their campaigns. There is a myth or legend that the number 13 is unlucky. This is not true. In my tradition, bakers used to bake 13 loaves of bread rather than 12 so as to have a spare for any misfortune that should befall, such as loss of one or the accidentally dropping of one and so forth. It is called a baker’s dozen.

From that same tradition, the Labour Party in England always sought to bring about harmony between the classes rather than class warfare. Those who still believe in class warfare, of either side, are propagating what they claim to be against, imbalance and inequality.

There is an interesting abbreviation in Brazilian Portuguese about the PT. It can either mean Partido dos Trabalhadores or Perda Total (Complete Loss), which is an insurance term for when a car is written off after an accident as not worth repairing. This term has entered the popular culture with the phrase, ‘Vai dar PT’ (It will be a total loss) or the joke inverted as ‘Não vai dar PT’ (It will not be a total loss).

The number 13 is used the Worker’s Party in their campaigns and is a prime number. The number Bolsonaro used in this campaign for the presidency is 17, also a prime number, one that is indivisible by any other number other than itself or the number one.

Anyone who considers himself a worker or not a worker must also think about why he considers himself as excluded or included in this category, and why anyone else is considered not a worker.

This is the time when all Brazilians should be thinking about loss, who has won and what was lost or won.

 

Companies pay for campaign against Worker’s Party through WhatsApp

bolsonaro_whatsappContracts worth US$ 3 million break the law on undeclared political donations

Patrícia Campos Mello

FOLHA DE SÃO PAULO

Companies have bought packages of mass dispersal of messages against the Worker’s Party (PT) using WhatsApp and are preparing a big operation in the week before the final round.

The practice is illegal, as it consists of campaign donation by companies, which is forbidden under the electoral legislation, and was undeclared.

The Folha newspaper found that each contract is worth up to US$ 3 million, and that among the companies buying are Havan. The contracts are for the dispersal of hundreds of millions of messages.

The companies supporting the candidacy of Jair Bolsonaro (PSL) bought a service called “mass dispersal”, using the user database of the candidate or databases sold by digital strategy agencies. This is also illegal, as the electoral legislation forbids buying the database from third parties, only allowing the use of lists of supporters of the candidate themselves (numbers given voluntarily).

When they use a third party database, these agencies offer segmentation by geographical region, and sometimes by income. The client is then sent delivery reports containing the date, time and content sent.

Among the agencies providing this type of services are Quickmobile, a Yacows, Croc Services and SMS Market.

Prices vary from R$ 0.08 to R$ 0.12 for dispersal of a message to the database of the candidate and from R$ 0.30 to R$ 0.40 when the database is supplied by the agency.

The user databases are often supplied illegally by credit companies or by staff from telephone companies.

Companies investigated by the report said they were unable to accept requests before 28th October, the date of the final round of the election, saying their services were booked for huge dispersal through WhatsApp in the week before bought by private companies.

Questioned whether he used mass dispersal, Luciano Hang, owner of Havan, said he “did not know what it was”, and that “We have no need. I did a ‘live’ broadcast here now. It was not boosted and already achieved 1.3 million people. What is the need to boost? Let’s say I have 2,000 friends. I send it to my friends and it goes viral.”

Asked for comment, the partner in QuickMobile, Peterson Rosa, said the company is not working in the political arena this year and that the focus is only on corporate media. He denied having signed a contract with political content dispersal companies.

Richard Papadimitriou, of Yacows said he would make no comment. SMS Market did not respond to requests for an interview.

The accounts for the candidate Jair Bolsonaro (PSL) show only that the company AM4 Brasil Inteligencia Digital as having received US$ 310,000  for digital media.

According to Marcos Aurelio Carvalho, one of the owners of the company, AM4 only has 20 people working on the campaign. “Those working on the campaign are the thousands of volunteer supporters throughout Brazil. The groups are set up and fed organically”, he said.

He said that AM4 only maintains groups on WhatsApp to denounce fake news, transmission lists and state groups called content committees.

However, the Folha newspaper found out from ex-members of staff and clients that the AM4 service is not restricted to that.

One of the tools used by the Bolsonaro campaign is the generation of overseas numbers automatically by sites such as TextNow.

Staff and volunteers have dozens of such numbers, which they use to administer groups or to take part in them. With area codes from other countries, these administrators escape the spam filters and the limitations imposed by WhatsApp — the maximum of 256 participants in each group and the automatic forwarding of a single message to up to 20 people or groups.

These administrators also use algorithms that segment the members of groups between supporters, detractors and neutral, and are thus able to customize the most efficient type of content sent.

Most of the content is not produced by the campaign but rather from supporters.

The administrators of Bolsonaro support groups also identify “influencers”: very active supporters who they contact to set up more groups and do other actions in favour of the candidate. This practice is not illegal.

There is no indication that AM4 signed contracts for mass dispersal; Carvalho denied that his company do user segmentation or manipulation of content.

Estimates of the number of people working in the sector on the number of WhatsApp anti-PT groups are very vague — between 20,000 and 300,000 — as it is impossible to calculate the closed groups.

Diogo Rais, Professor of electoral Law at the Mackenzie University, said the buying of WhatsApp dispersal services by companies to favour a candidate would be considered an undeclared campaign donation, which is forbidden.

He did not comment in specific cases, but reminds that this form could be qualified as a crime of abuse of economic power, and of judged to have influenced the election, lead to disqualification of the ticket.

IN MINAS GERAIS, ROMEU ZEMA HIRED A BOOSTER COMPANY

The candidate for governor of the Minas Gerais state of the Partido Novo, Romeu Zema, declared to the Superior Electoral  Court, payment of US$ 54,000 to Croc Services for diffusion of content. The state directorate of the party in Minas spent US$ 45,000 with the company.

The Folha newspaper had Access to the proposals and e-mail exchanges from the company with various campaigns offering mass dispersal using the database of third parties, which is illegal.

Questioned by Folha, Pedro Freitas, partner-director of Croc Services said: “The one who has to know the electoral legislation is the candidate, not me.”

Later, he back-pedalled and said he did not knowf his company provided services to Zema. Afterwards, he sent a message saying he had checked their records and that they had sold packages for mass dispersal over WhatsApp, but only to databases of the candidate himself, party members and Zema supporters —which is legal.

Asked for comment, the campaign said that they had “contracted the message service only for WhatsApp for the sending to party members, people registered to the web site and supporter mobilization events”.

The Folha newspaper found that voters in Minas received WhatsApp messages linking the vote for Zema to the vote for Jair Bolsonaro days before the first round. Zema, who was in third place in the polls, finished in first place.

Collaborators: Joana Cunha and Walter Nunes

The Brazilian marketer who imported the Trump’s campaign method to use in 2018

Andre Torretta

Andre Torretta, at his office in São Paulo. Luís Simione

Andre Torretta associated himself to Cambridge Analytica, the controversial agency who worked for the Republican

“Am I fooling you? No, I am just giving you what you want to see”, he says about the strategy
El País, São Paulo 15 Oct 2017

“I bought a beach and I don’t want others to go there. What is the best sign to put in the sand?”, marketer Andre Torretta asked as he showed two photos in a PowerPoint presentation on his MacBook. “This one, saying the beach is private, or this one, warning of sharks? The one about sharks works better”, he said smiling, at his office, at a colourful coworking and ostensibly friendly building in a prime area in São Paulo. And if there’s no shark on the beach it would be a lie, right? “If there were no shark, then it’s fake news”, he conceded. “I won’t do that, but it exists, it’s possible and can be done, at the limit of ethics”.

The metaphor of the shark ” at the limit of ethics” is part of the material the 52 year old from Bahia state takes to introduce his new company, Cambridge Analytica Ponte, in the competitive Brazilian political marketing market. The agency is a mixture of his old consultancy specialized in class C Brazilians, Ponte Estrategia, with the British multinational Cambridge Analytica, a company that had promised to change, using psychology and big data, the behaviour of voters and consumers. In its portfolio, Cambridge Analytica has nothing less than the successful – and controversial – campaign of Donald Trump in the United States. The strategy used is to track the personality of the individuals on the basis of classic precepts of psychology and on the digital breadcrumbs we leave every day, such as social network profiles, GPS locations of places visited, data from the use of public services and online purchases. From there, they say they can produce messages moulded practically to the individual level, and they work to ensure they are delivered. To the target.

Ever since Trump won, Cambridge Analytica, which boasts of having read the minds of 210 million Americans, has not left the centre of controversy. It’s principal shareholder is the billionaire Robert Mercer, known for having changed Wall Street using big data and for being an important financier of conservative and far-right activists. There are academics in the USA and in the United Kingdom saying there are terrified about the company, a precisely targeting propaganda machine, and which if used without scruples, could be damaging. Others say a lot of it is self-marketing and are sceptical if whether, in fact, their method can deliver. “Cambridge did an ad in which it seems there is a monster behind it, but there isn’t. It is about making it more efficient”, says Torretta, who says he has adapted the strategy of the company because of the legal and technological differences between the two countries. “I tropicalized the methodology.”

If in the USA the fame of Cambridge is associated with CEO Alexander James Ashburner Nix, a 41 year old  Englishman who only appears wearing well-cut suits, branded glasses and well-combed hair, Andre Torretta is definitively more tropical. On the Friday he received EL PAIS, the marketer who has worked for 20 years in the field and on campaigns such as those for the Jose and Roseana Sarney from Maranhão and that of ex-President Fernando Henrique Cardoso, did not wear a suit and wore a bright lilac coloured shirts. The thick lens glasses were not of any definable brand. He didn’t stop making jokes, many of them about himself. “My jokes are off the record, for the Love of God.” He said he couldn’t speak English and is far from the technological genius type. Even so, he guaranteed, it was the British sensation from the world of political marketing who sought him out, not the other way round.

According to Torreta, when they were working for the Trump campaign, Cambridge were also looking to the Brazilian 2018 elections. He says he was sought out a year and a half ago by a Spanish executive from SCL (Strategic Communication Laboratories), the mother company behind Cambridge Analytica. The envoy was looking for a partnership. That was when he heard for the first time of the Ocean methodology. “The guys were saying Ocean, Ocean. And I said, well, but tell me how and what it is. How do you get the egg to stand up?”, he said. The method (read further below) classifies people into five profiles in accordance the initial letters of the word – Openness (measures how open people are to new experiences), conscientiousness, extraversion, agreeableness and neuroticism (emotional instability or how neurotic the person may be) – to then customize the campaigns for each profile. “So I saw they had a methodology able to make the egg stand up”.

In the United States, the ‘egg’ is ‘standing up’ thanks to around 7,000 data points that Cambridge, according to Torretta, is able to use on each individual. “The United States legislation is obscenely open. Thank God ours is not like that. It doesn’t allow me to go to Mastercard and buy all your data. It is forbidden both here and in England, in Germany it’s impossible. In the United States they even sell your soul”. In Brazil, Torretta calculates that this number of data points on everyone reaches 750 and that is where the tropicalization starts that he says he has done on the method. “The databases for Brazil are being built now. We have good well-stocked public databases. The government must have at least 500 to 700 data points on us, IBGE must have about 250 points, not personal, but of the micro-region where you live”, he explained. “So we already have 700 data points on each Brazilian. The credit rating agency, Serasa, must have another 40 data points”, he enthuses. He is convinced that, even if out data situation does not compare to the USA, his new company will work with much more information than any of his competitors. Not even private enterprise uses the potential of the data already available in Brazil, the marketer said.

The key, he argues, is going beyond the traditional stratifications of social class, place and sex to something much more specific. The campaigns in Brazil are already using some micro-targeting, but the bet has been made that the entry of big data and the consolidation of social networks changes the outlook profoundly. “Those going after Ivete Sangalo are the same as those going after Claudia Leite? No.” In other words, two women aged 35 from a prime area of Jardins, in São Paulo, may have completely different inclinations on the question of global warming and this can be decisive when buying a car or voting. In the calculations of the marketer,  if each presidential candidate, for example, has more or less 50 speeches on the programme for government, you only have to choose which is the most suitable for each one. Torretta goes back to the PowerPoint presentation to point out a slide with five photos of President Michel Temer in different circumstances. “I can tell you which photo is better, in accordance with the neighbourhood or social class or the psychographic trace [of the person]”, he said. “Am I fooling you? No, I am just giving you what you want to see.”

Ethical dilemmas and MBL

But can the production of speeches on demand not deepen ethical dilemmas already known in national political marketing? Up to what point can the technique go without manipulating or stealing elections? Torretta rejects the idea. “I am a professional of argument. I don’t need to lie. We talk about change of behaviour, behavioural communication”. He admits, however, that the example of the sign warning of supposed sharks at the beginning of the report, provoking or exacerbating the feeling of fear to induce the behaviour of not going to the beach, is already being used in Brazil. “There you have to have a change in the game that, for me, is more violent than technological. This type of communication, that MBL knows how to do very well, was used in war. It’s more deep-seated. Someone taught them this.”

Torretta said he would reject a proposal to work with the right-wing activists Movimento Brasil Livre, but praises the digital militancy expertise of the group, who he says have an excellent database. “I always highlighted their skill.” And with the candidate the group has supported up until now, the mayor of São Paulo, João Doria, Would he work with them? “I have already done lots of talks for Doria, for Lide [organization of companions set up by Doria]. That’s one conversation I cannot deny”.

With a lean “and well-paid” group of 12 people, the marketer says he has not yet closed a deal with any presidential campaign, but says he was sounded out by two of them in recent weeks. “And we are in two state pre-campaigns”, he adds, without revealing where or for whom. “The problem is that Cambridge is perhaps very sophisticated for the Brazilian regional market, because we don’t do any digital campaign well”, he said. “Now a breach has opened up for politicians to do boosting [to pay for publications to reach more people on Facebook).” Thus he believes that “Cambridge will be sexy” for the Brazilian market.

The change that allows paid political advertising on Facebook, approved in the Brazilian political reform, is at the centre of a scandal in the USA, with two revelations: that it was staff of the social network itself that had worked as consultants on the Trump campaign, which invested heavily in performance tests of different ads on the platform, and that Russia paid to broaden the sending of messages on the network to stimulate the political division in the USA. The centrality this discussion took on in the USA showed that this authorization of use in Facebook in Brazil could be crucial in 2018 both for companies such as Cambridge as well as the monitoring of social networks, which have been active in Brazilian campaigns since 2014. On one point, the tools of big data can mine the information of each voter. On another, the Facebook advertising machine which holds a much more complex map of the user inclinations will deliver the political campaign with precision.

Whatever the case, for Torretta, any strategy that only considers Facebook in Brazil will not be complete. “The big social network in Brazil is WhatsApp”, he says. And that is where the tropicalization of the method to which he referred will be complete, his preferred workaround. He intends to use all the databases within reach – the first one being that of the party for which he is working – to transform the WhatsApp users into digital activists. He says he merely wants to systematize what people are already doing on their own. “People are interested in politics, but the parties are not taking part in the discussion.” Torretta tells how he created an app similar to WhatsApp, which has to be downloaded by sympathizers to work as a channel with the campaign. With the app, one can Interact with voters and ask them to share the candidate’s content on all the social networks, and especially on WhatsApp itself. Even if the adherence is only 10%, the impact will be considerable, he believes.

To set up this distribution network the marketer plans to leave big data and the new tools and return to his experience as a consultant specialized in class C, accustomed to qualitative surveys and to explain to companies regional differences, especially in the north-east. The mine of his original company, Ponte, he argues, are the dozens of contacts that he calls antenna, which he gathered during years of trying to understand the level of consumption in poorer communities: a community leader, a rapper, a young person who has the most visited page on the extreme east zone in São Paulo, all could have been his antennas in some consultancy for private brands in the past.

It all sounds very ambitious, but the marketer says the workaround has been tested and is working. The laboratory was a image positioning campaign carried out for the state deputy at the beginning of the year in Amapa – he doesn’t reveal the name. His team went to the state in the north, mapped the antennas, distributed the application and started to send out material. “Brazil is like the jabuticaba fruit. No marketer from abroad has been successful here. Quite the contrary, we export marketers”, he says. “Something that works in New York may very well not work in Amapa. But something that works in Amapa works anywhere”, he laughs.

Besides the pilot in Amapa, the preparation for the 2018 campaigns also involved a classic research study, to monitor Brazilian humour and the principal matters of interest. One of the basic but essential discoveries, he says, is that the population wants to see empathy in politicians. Another, more surprising for him, is that the discomfort with the very high interest rates for consumers has come on to the agenda for once and for all, as a result of the majority of the electorate with at least secondary education. “I can elect a federal deputy Just talking about interest rates”, he says. Another of his conclusions is that the preaching for “smaller State” hasn’t yet got through to the class C population.

What are the chances of a radical candidate, from the left or the right? At this question, Torretta becomes serious. He says he doesn’t believe that radicals – without mentioning names – can win. “The intelligent radical is one who can fool the people and pretends to be in the centre. People do not like radical things”, he says. “And, thank God, our radicals are not very intelligent and society has not embraced their agendas. This is why they have only found an echo in their own groups “, he says, but adds with more humour than analysis: “I have faith. I go to church on Sunday, on Monday I go to umbanda and on Tuesday I go to the spirit centre”. And where are the white clothes of the candomble devotees if we on a Friday? Torretta turns in his chair and raises his leg up high, showing his white trousers. “Marketer and from Bahia. This is a profession with a very heavy karma.”

The Ocean method

Ocean is the initial of each word: Openness (measures how open people are to new experiences), Conscientiousness, Extraversion, Agreeableness and Neuroticism (emotional instability or how neurotic the person may be) – to then customize the campaigns for each profile

To apply this technique, the person has to respond to a questionnaire consisting of about 20 statements, whose responses are made into scales of how much they agree or disagree with a given statement. The phrases are simple and direct, for example such as, “I have a vivid imagination”, or “I believe in the importance of art”, and “I tend to vote for liberal politicians” or “I don’t like myself”, “I insult people”, or “I run away from my responsibilities”.

Before seeing the result, you have to leave your e-mail or log in to a Facebook account, obliging the user to leave another data point to fatten the agency database.

Torretta explains it is possible to construct an Ocean scale, as it would be impossible to have a questionnaire responded to by 100% of the population. “Of course Cambridge dreams of having 7 billion people in the whole world answer the questionnaire”.

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.

Farage Businessweek cover
Featured in Bloomberg Businessweek, July 2, 2018. Photographer: Olivia Harris/Reuters
 by Cam Simpson, Gavin Finch and Kit Chellel

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.

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 the public. 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—knowledge pollsters provided while voting was still underway and hours ahead of official tallies. These 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.

Hedge fund managers, of course, try to beat the market by getting the best information they can. For exit polling data, that’s a tricky business. Pollsters have always sold surveys to private clients, but U.K. law restricts them from releasing exit-poll data before voting ends. While some of the practices discovered by Bloomberg fall into a gray area, 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.

Survation wasn’t alone. As YouGov’s Twyman predicted a Remain victory on Sky, three of his colleagues were watching from inside the London office of a hedge fund. In addition to the public exit poll for Sky, YouGov earlier sold a private exit poll to this fund, which provided data to traders that matched the results Twyman presented on television, effectively giving them an edge for betting on the rise in the pound sparked by his comments, according to sources familiar with the events. YouGov staff code-named it “Operation Pomegranate.” It charged the hedge fund roughly $1 million, according to knowledgeable sources. Separately, YouGov gave Sky its poll for free. The hedge fund did extremely well, according to three sources familiar with the situation.

Opinion polls published in the British press during the critical final days of the campaign helped voters make up their minds—about both whether to take part in the referendum and which side they were on. But the relationships between polling firms and hedge funds in the lead-up to the vote, and on the day, created an inherent conflict. With one hand, pollsters fed the public information that affected the outcome and moved the markets. With the other, they sold data privately to clients betting on market moves created by their public-facing polls.

Two years after the historic vote, the pound is back at $1.32, the bottom of the crash that morning. Inflation is up, and the Bank of England has said British households are poorer than they would have been otherwise. People remain divided, while the government of Prime Minister Theresa May is deadlocked over how to move forward.

Those aren’t the only unanswered questions. After the world asked how the nation’s leading pollsters could have been so wrong, British lawmakers launched an inquiry into whether misleading polls, in the referendum and other recent elections, were distorting democracy. But even members of a House of Lords select committee that looked into the subject had no idea that the companies they were probing had essentially become tools for firms wagering on the nation’s mood and votes. The Lords’ final report, released in April, made no mention of the relationships between pollsters and hedge funds.

George Foulkes, a Labour member of the upper House of Lords, was the driving force behind the select committee. On Monday, he called for lawmakers to initiate a Parliamentary inquiry into the “astonishing” practices revealed by Bloomberg. “The case for statutory regulation of polling companies is now overwhelming,” Foulkes said.

Brexit wasn’t even the first time it happened.

Play Video of Sky News Broadcast of Farage `Concession’ Statement and YouGov Poll

In the U.S., national newspapers and broadcasters hire for-profit pollsters for elections. But the news organizations oversee the design and analysis of the polls and brand them in their own names, giving them greater confidence in the independence of the data. By contrast, election polling in the British press is a brand-building affair for U.K. pollsters. Charging the press little, or even nothing, they use media polls as marketing tools to attract lucrative commercial clients. About 99 percent of the more than 4 billion pounds ($5.3 billion) in annual industry revenue typically comes not from elections but from marketing-related research—such things as, “Do you prefer Coke or Pepsi?” As the Lords committee report explained, election polls were “described by many of the witnesses as a ‘shop front’” for their commercial activities.

Polling firms found a way to tap deep-pocketed commercial clients for election polling during the Scottish independence referendum in September 2014. It all started when a pair of YouGov polls in the British press set off a national panic ahead of the vote. YouGov had nationalists closing the gap, and then, days later, jumping ahead with fewer than two weeks left in the campaign. Nervous investors sent the British pound and bank stocks down sharply. Shocked government leaders responded, just days before the vote, by promising a greater devolution of powers to the Scottish people if they stayed in the U.K., a pledge known as “The Vow.” Critics would later charge that misleading YouGov data, which proved fantastically off the vote, had shaped the future of an entire country.

The phones in YouGov’s offices rang like mad in the days between the Scottish polls and the referendum. Hedge fund executives were among those on the line. If YouGov was conducting another poll before the vote, traders said, they’d be willing to pay vast sums for a heads-up just 30 minutes to an hour before publication, according to two knowledgeable sources. Since news of the poll alone likely would move markets, the survey’s accuracy was meaningless; traders simply needed to know the results before they became public. They offered YouGov several multiples more than the newspapers had paid to commission the polls in the first place, the two insiders recalled. YouGov rejected these offers, the insiders said. Survation, along with at least one other pollster, saw other opportunities.

Survation organized and sold last-minute tracking polls and a syndicated exit poll for the Scottish referendum to some of the world’s biggest hedge funds, according to three knowledgeable sources. Clients included Brevan Howard Asset Management, then managing about $37 billion, Tudor Investment Corp. and the Japanese firm  Nomura Holdings Inc., according to one knowledgeable source. Brevan Howard even hired a second U.K. pollster, ICM Unlimited, and merged data from the two companies into its trading decisions, the source said. Pollsters at Survation and ICM streamed results throughout the day of the vote, allowing their hedge fund clients to place bets while voters were still casting ballots. Brevan Howard, Tudor and Nomura declined to comment for this story.

By early the next morning, it was clear that Scottish voters had rejected independence overwhelmingly. The YouGov poll that had sparked the most turmoil had missed the final mark by 6 points. Survation’s private exit poll, however, was accurate enough that its clients had what they needed to profit, according to knowledgeable sources. A lucrative  line of business was born for two industries.

In 2015, the Conservatives, under David Cameron, swept to dominance in the U.K.’s general election. Cameron had promised to hold a referendum on the nation’s membership in the European Union if he won. Hedge funds realized immediately that if the Scottish campaign had moved markets, a referendum on the U.K.’s membership in the world’s largest trading bloc might shake them to their very core. YouGov started getting hedge fund calls right away, according to sources familiar with the matter. So did the other polling companies. Buying a trading advantage through private exit polls on the day of the referendum was a primary interest, according to executives across the polling industry. But public-opinion-driven swings in the market during the campaign also could offer lucrative trading opportunities.

Pollsters brainstormed, inside their companies and with consultants, about the range of services they could sell, often at prices 10 or more times beyond the typical tab for political polls, several executives said.

But there were two potential obstacles to hedge fund exit polls. For starters, U.K. broadcasters normally air the results of their own exit poll at 10 p.m., immediately after voting closes. If this happened for Brexit, it might negate some of the advantages hedge funds had from private polls by giving the world definitive information at 10 p.m., according to polling firm executives. That’s because the official exit poll—jointly funded by the BBC, Sky and ITV, and based on 20,000 face-to-face interviews—is the authoritative projection of the day’s voting. It correctly predicted the last four U.K. general elections.

The face of the broadcasters’ election-night exit poll, its chief designer and interpreter, is a 64-year-old Scottish professor named John Curtice. He enjoys a rare level of trust across party lines and a cult following among political junkies. After the government set a referendum date, the academic spoke with broadcasters and they decided the usual exit poll was not feasible, recalled Sam Woodhouse, a BBC editor involved. They had made the same call for Scotland. Curtice would later tell BBC viewers that his predictive models relied on a comparable vote, and for Brexit there was none, making a credible exit poll an expensive and difficult proposition. However, hedge funds were spending the money to line up their own private polls—and Curtice was involved.

He told Bloomberg that polling company ICM paid him for his work on behalf of a hedge fund called Rokos Capital Management. Curtice said he participated “in a couple of phone calls with Rokos, where the design of the polling itself was discussed, alongside the modeling I was doing.” He said he also had discussions solely with ICM. The company conducted an exit poll for Rokos, according to Curtice and another knowledgeable source. Curtice said he didn’t help conduct the poll on the day, nor did he help analyze the results. He said his primary role was to help ICM build a model that enabled the hedge fund to predict the likely outcome of the vote as localities began reporting results. Rokos could then calibrate its trading strategy off a mixture of polling data and results as they started coming in after midnight. Alan Kilkenny, a Rokos spokesman, declined to comment.

Another member of Curtice’s media-polling team, Steve Fisher, an associate professor at Oxford University, helped Survation design the syndicated exit poll it conducted for multiple hedge funds, according to two sources familiar with the matter. Fisher declined to comment.

Curtice also is president of the British Polling Council, a voluntary, self-regulating body that counts YouGov, Survation, ICM and the nation’s other major pollsters among its members. The lack of a formal exit poll for broadcasters made it possible for the group’s members to earn record revenues from Brexit, some polling company executives said. “The claim sounds plausible,” Curtice said, “but I am not in a position to verify it one way or the other.” He also said he was not aware of specifics about other hedge fund polls, or their results, including ICM’s.

Another potential obstacle to hedge fund exit polls may have been more significant: It is a crime in the U.K. to “publish” any exit poll results prior to 10 p.m. Hedge funds wanted data streamed to them throughout the day so their own data experts could track trends, and so they could make bets while people were still voting. But the law broadly defines “publish” as making any data “available to the public at large, or any section of the public, in whatever form and by whatever means” [emphasis added]. Gavin Millar, QC, a public law expert who consulted for a media client about the law in a previous election, said it has never been tested, so conduct potentially triggering charges is a legal gray area. (Millar has represented Bloomberg LP in unrelated matters.) On the books since 2000, the crime carries a penalty of up to six months in prison and a potentially limitless fine, he said.

Inside YouGov, concerns about the law limited the company’s potential offerings, according to an email that YouGov founder Stephan Shakespeare shared with Bloomberg. YouGov’s chief financial officer spoke to lawyers and decided that a single hedge fund could not be considered “a section of the public” but that multiple hedge funds getting the same exit poll might cross the line. Other polling companies appear to have interpreted the law differently.

How the Pound reacted to BrexitAs the vote neared in June, Leave’s rising support in polls sank the pound, and hedge funds intensified their negotiations with YouGov and other pollsters. Given the amount of money on offer, several polling company executives said they believed nearly everyone in their industry ended up working for traders in one capacity or another. In the runup to the referendum, a handful of press accounts referenced that hedge funds were in the market for, or had hired, pollsters, but none provided details. Bloomberg has confirmed that the following companies were hired to conduct private exit polls: YouGov, Survation, ICM, a Birmingham company called BMG, and ComRes.

Another company, Populus, conducted an exit poll for Michael Ashcroft, the billionaire former deputy chairman of the Conservative Party. Ashcroft, who runs a bank in Belize, routinely commissions polls that he later releases to the public, as he did on Brexit. Andrew Cooper, the Populus founder and former director of strategy for David Cameron, also said his firm was paid to create a polling-based model that enabled a financial client to calibrate trades as results came in after midnight, but he declined to name that client, citing a non-disclosure agreement.

Beyond the broadcasters’ exit poll team of Curtice and Fisher, several other leading U.K. academics also worked for hedge funds—either directly or for the pollsters in their employ. “I was running exit polls on the day for hedge funds,” said Matt Goodwin, a professor at Kent University and the author of books about UKIP and Brexit. He declined to elaborate, citing non-disclosure agreements.

Shakespeare founded online pollster YouGov in 2000 at the dawn of the information-technology age. Thanks to its prolific use of news media polls to draw commercial business, YouGov developed one of the highest profiles of any U.K. polling firm. One of its most successful commercial products is called the BrandIndex, which “measures public perception of thousands of brands across dozens of sectors,” giving stock pickers a leading indicator of a company’s share price. In 2008, YouGov set up its own hedge fund to trade off the data, but the ensuing financial crisis sank it.

In YouGov’s early days,  a company director tried to get attention by using its online surveys to gamble on a television talent show, Pop Idol. YouGov announced a prediction that crooner Will Young would win with 53 percent, and the director bet on the singer. Young won the contest with 53 percent of the votes. A British tabloid then started buying talent show polls from YouGov. The company later banned employees from betting on its work, but pollsters noticed something: Their public surveys were moving the odds set by the U.K.’s bookmakers. Professional gamblers offered cash for leaks, just as hedge fund traders would do later during the Scottish referendum, according to senior executives. They wanted advance word so they could bet on the changing numbers, not the outcome. YouGov turned down all such offers, Shakespeare said, adding that his company is proud of operating ethically.

YouGov’s staff realized that people could profit off a poll by learning its results in advance, rather than betting on the outcome of the underlying event the poll was meant to predict, according to sources familiar with the events.

As the EU referendum approached, YouGov executives discussed the idea of selling an exit poll exclusively to a single hedge fund for a huge premium—what would become “Operation Pomegranate.” The hedge fund exit poll would help traders predict the results of the public one YouGov would release on TV later that night, according to two knowledgeable sources. The hedge fund could then make trades with high confidence, because it could predict how Twyman’s call—52-48 for Remain—would likely move the market, the sources said.

Shakespeare confirmed that the polls showed the same thing. But he said it was never his company’s intention to sell private polls in order to help clients predict the outcome of a public poll. Shakespeare also said the “trading strategies of hedge funds are extremely secret. We did not know their strategy and still don’t.” YouGov’s hedge fund client “did not know what the Sky poll would say,” Shakespeare added. “They had their own independent—more detailed and bigger data. But the outcome was the same.”

One reason YouGov could charge so much—roughly $1 million—was because it would air the only public exit poll that night in the time slot normally designated for Curtice’s authoritative survey, the sources said. Indeed, YouGov was able to charge much more than what other polling company executives said they collected. Shakespeare said the price had nothing to do with his firm’s public polling. “We try to get a fair price for our data’s superior quality, volume and detail,” he said. Shakespeare declined to say how much YouGov charged Sky for the broadcast poll, but people on both sides of the transaction said it was free.

On the night of the vote, though, one final question loomed. YouGov’s agreement with Sky specified that if the results were within 5 points, the pollster had the option of saying on air that the vote was “too close to call.” If Twyman said that, the pound’s movement probably would have been less predictable. But that potential was removed, according to two sources familiar with the events, when Shakespeare told Twyman by phone to make the call for Remain. Shakespeare said he urged Twyman to speak with caution, adding that his decision was based on his confidence in the data and was “in no way connected with any known trading strategy of any hedge fund.”

In the runup to the referendum, YouGov also sold regular online polls to hedge funds, according to clients and others involved. The data effectively provided hedge funds with an early indication of what YouGov would publish later, according to one source familiar with the matter. Shakespeare said that this was never his company’s business strategy. He also said all of “our data predicted the same result. There was never any difference between what our clients knew and what the public knew.” Sky declined to comment.

Shakespeare said any betting strategy based on predicting how public polls might move markets “would be extremely risky.”

YouGov wasn’t the only pollster launched with a boost from talent show betting. 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.)

In response to questions, Lyons-Lowe released a statement: “Survation Ltd. has established itself as a leading opinion poll and research provider, including in respect of referendums and other elections where innovative methodologies are required. We work regularly for a wide variety of newspapers, private clients and political parties. Survation Ltd. does not comment on any confidential client work.”

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.”

The pound offered the simplest play for short sellers looking to profit from the Brexit vote, vs. stocks or other assets. That’s because currency markets are the deepest, most liquid markets in the world, making them the easiest to trade. In this case, another factor also made it easier. As early as January, banks started downgrading their forecasts for the pound to reflect the risk of a Leave vote. JPMorgan Chase & Co. lowered its estimate to $1.32. Other banks made similar predictions. The marker helped international financial institutions hedge their risks, but it also gave short sellers a target.

There are many ways to bet on a currency crash, but the main vehicle for many hedge funds is derivatives. Their existence means that hedge funds buying exit polls didn’t need to get it right. They just needed to be more right than everyone else. Many were, because even exit polls that got it wrong gave hedge funds underlying data that pointed to pro-Brexit trends, according to those involved. One example: Even though YouGov decided not to declare it “too close to call,” its hedge fund client still could use the underlying raw data to get its own, potentially more advanced analysis, Shakespeare said.

Pollsters involved in the exit polls say their hedge fund clients had them stream data in regular intervals—as often as every hour—while voting was underway. One veteran London hedge fund boss, who said he sat out Brexit, said that having data just one hour before official tallies that showed the vote was close, or leaning toward Leave, would be like a lifetime for an experienced trader. For the best ones, he said, 20 minutes was more than enough.

Derivatives allow traders to benefit greatly from market moves with only a small sum on the table. (Losses also are amplified.) They are priced to reflect the market’s mood, so the Remain sentiment in the polls leading up to the vote, and after Sky’s opening minutes, made short bets cheap. The groupthink effect was what traders on currency desks call “keeping the pigs hungry.” A short seller needs a world of voracious buyers to think he’s the dumb one, for as long as possible. The more unexpected the victory, the bigger the potential profit for the hedge funds.

Pre-election polls published in the British press effectively smoothed the way. In the final four days, YouGov, Survation, ComRes and BMG all published polls showing Remain ahead. Some of their polling specifically was cited by currency analysts for moving the pound higher in the final week. Populus showed Remain winning by 10 points, making it the most off-base poll released. That one came out the day of the vote. None of the pollsters publicly disclosed that they were simultaneously working for hedge funds that stood to make massive profits if the results went the other way—against all expectations.

Effect of the concession with YouGov pollThe effect intensified on the night. The Sky News “exclusives” from Farage and Twyman filled an information vacuum created by the lack of the formal broadcasters’ exit poll headed by Curtice. The pound was so buoyed that Bloomberg sent out a chart to financial clients worldwide showing the currency “heading for its best week against the dollar since 2009.” That was at 11:32 p.m.

Just before midnight, the market got nervous, and the pound dipped below $1.49 for the first time since 10:05 p.m. Just after midnight, Newcastle reported for Remain, but at a much narrower margin than expected. Minutes later, the price of derivatives tied to a declining pound likely shot up, as measured by IG Fund, an online exchange for currencies. IG’s rolling prediction instantly dropped to just a 69.5 percent probability for Remain, down from 91.5 percent. Anyone holding derivatives before Newcastle who had shorted the pound, however, was already in the money.

At 12:16 a.m., the city of Sunderland dropped a bomb—61.3 percent had voted for Leave, instead of the roughly 53 percent predicted by polling models. The pound plummeted one minute later, hitting $1.43. The pattern repeated over the next five hours.

Inside its hedge fund client’s office, YouGov had three pollsters working through the night. They spoke directly with the hedge fund’s analysts, according to an inside account confirmed by Shakespeare. The analysts would duck in and out of the room, asking YouGov’s team to quantify, from zero to 100, how confident they were in their latest predictions, according to a source familiar with these events.

At 5:28 a.m., the pound bottomed out at $1.32, the mark cited by JPMorgan back in January. However, something was significantly off, according to an analysis of data later compiled by researchers at the Swiss Finance Institute. They concluded that there was so much false sentiment for Remain built into the market that night that the pound was at least one hour slower in reaching its bottom than it should have been, and slower than even the dumbest computer model they could create. They attributed this to a herding mentality similar to what happens in a financial bubble. All of that pro-Remain sentiment made for a lot of hungry pigs.

Farage on Sky News

Brexit’s Big Short: Hedge Funds Hired Pollsters and Cashed In

If public polling up to and on the final day inflated a bubble, how might private polls have helped traders? In at least two ways, according to pollsters involved, hedge fund traders and consultants. First, commission a private poll that closely tracks what will be released to the public, as in Operation Pomegranate, tipping traders in advance to how the market may move. Second, get better data than the public has, allowing traders to see if the market’s faith in the pound is misplaced, or the currency is overvalued. Both strategies come with some risk, but because the trader is betting against the prevailing market sentiment, the bet is cheap and the potential payout is high—just the sort of situation hedge funds love. For traders, it doesn’t matter if the pollster’s ultimate exit-poll prediction is wrong (as some were on Brexit night). Hedge funds’ internal models, some far more advanced than anything in the polling industry, fed on raw data, such as turnout in specific regions, that allowed them to make smarter bets. “They are looking for a slight edge—they don’t expect you to be 100 percent accurate,” said one pollster.

Rokos, which had worked with ICM and Curtice, ended up making more than $100 million, or 3 percent of its entire value, in a single day, according to the results Bloomberg first reported in the wake of the vote. Brevan Howard, which at a minimum bought exit-polling data from ComRes, made $160 million on June 24 alone. Brevan Howard declined to comment.

While the identity of YouGov’s Operation Pomegranate hedge fund client remains unclear, knowledgeable sources identified two clients for its pre-election polling. They are  Capstone Investment Advisors and Odey Asset Management. Capstone, then managing more than $5.2 billion, made about 1.7 percent of the value of its biggest fund off its Brexit trades, Bloomberg reported after the vote, citing a knowledgeable source. Some of that was specifically attributed to bets placed on price swings leading up to the referendum. Capstone declined to comment for this article. Odey’s eponymous founder is Crispin Odey, who was both a top fundraiser for Farage and a leading contributor of campaign cash to the pro-Brexit side. His firm made about $300 million from Brexit. “There’s that Italian expression,” Odey boasted to the BBC of his Brexit bounty: “‘Al mattino ha l’oro in bocca’—the morning has gold in its mouth.”

In an interview with Bloomberg, Odey said the private polling purchased from YouGov ahead of the vote was valuable, though not definitive, because there was still a high level of uncertainty about the outcome. He said his firm didn’t buy an exit poll on the day. “Everyone is going to try to improve the information they have,” he said of hedge fund surveys. “That’s the arms race.” But, he said, it shouldn’t be possible for some traders to pay more for better information. “The idea of public markets is that you have equality. If you don’t, then one has to be worried about that.”

At least six other hedge funds were among those negotiating or shopping for polls, according to interviews with polling executives, including one who accessed his email archives for Bloomberg during an interview. These included  Arrowgrass Capital Partners, Element Capital, Maven, PointState and TSE Capital Management. The same polling executive said that at least three more— North Asset Management, SPX Capital and Vigilant—were trying to obtain information regarding the timing of media-published polls. It’s not clear which, if any, bought polling. All of these firms declined to comment or did not respond to requests for comment.

Dawn Hands, the managing director of pollster BMG, said her firm “does not comment on the detail of any research conducted privately, nor name any of its private clients.” Gregor Jackson, research director at ICM, confirmed that the company had private clients in the Scottish and EU referendums but declined to comment further. A ComRes spokesman also declined to comment.

Capitalizing on a wave of market-moving political volatility stemming from voter discontent across the world, some of the pollsters involved in Brexit have tried to replicate their success beyond the U.K. Survation worked for financial services firms in the Italian election in March, when two populist Euroskeptic parties won, according to a knowledgeable source. There could be more to come for the U.K., too, with George Soros, among others, pushing for a new EU referendum.

Even if that doesn’t happen, Prime Minister May’s government remains seized by internal divides over Brexit, leading to predictions of a new snap election. A pollster who profited off the EU referendum said, “That would be something that would have the potential to move the markets around” again, because a snap election would really be about implementing Brexit.

Asked for his prediction, the pollster demurred. He said he will keep his opinions to himself until hedge funds come calling again.

(Updates with call for Parliamentary inquiry in 16th paragraph. Previous version corrected poll number on Scottish vote.)