The Treasury Committee has written to the FCA on 27 September 2018 concerning the alleged profits made by some Hedge Funds that sold sterling short before the outcome of the Brexit vote was declared.

We all will recall the immediate publicly available information at the time was that ‘Remain’ would win with the pound rising above $1.50 in response within an hour of the polls closing.

A group of hedge funds – apparently at least a dozen and “potentially many more” – had hired at least five polling companies, to sell them critical and advance information “including data that would have been illegal for them to give to the public”. The information so provided suggested that most of the pundits were wrong and so gave them the confidence to trade sterling on the basis that an apparent ‘remain’ vote would be revealed to be incorrect once all the votes were counted.

On 16 October 2018 the FCA in its response states that “any person holding information that is not in the public domain should be mindful that such information could be inside information for the purposes of the market abuse regime”. Interestingly the Treasury Committee’s letter of 24 October has asked the FCA for an ‘indication’ on whether it is taking any steps on investigating whether any uses of private polling data have contravened market abuse regulations.

This is all new territory for the Regulator and we await the outcome with keen interest as to whether the use of private polling date by some hedge funds may have contravened market abuse regulations.