as our independence day!

The British people have made a very

clear decision to take a different path.

No one really knows what the future is going to look like.

That's a defacement of the Union Jack!

You're not allowed to deface our flag

The shocking defeat of the Remain campaign,

"We've got our country back"

Caused the largest collapse of any major currency

in the history of the modern global financial system.

You could literally watch the pound

falling off the edge of a cliff.

The last time we saw falls of 8%,

I'm not sure we actually know.

People in the City of London were running

their own private polling to get information

about the vote while it was still happening.

It was probably one of the most lucrative nights

for the hedge fund industry that there had ever been.

My name's Gavin Finch, I'm a journalist at Bloomberg News.

I cover financial crime.

I'm Cam Simpson, I'm an investigations editor and writer.

My name is Kit Chellel,

I'm a reporter with Bloomberg,

and a writer for Businessweek.

And we're the three reporters

who broke the Brexit Big Short.

The Brexit night was a huge deal

for everyone in the country.

I watched it on television the same way most people did.

At 10pm voting stopped,

the polling stations closed.

All of the networks, all of the broadcasters

went immediately to their coverage.

In or out. It is too late to change your mind now.

So within the first minute they had a concession

from Nigel Farage who's the global face of Brexit.

This statement, as the polls close,

"It's been an extraordinary referendum campaign,"

this is Nigel Farage, "turnout looks to be

exceptionally high and looks like Remain will edge it."

I remember being shocked when I heard that just

because it was quite out of character for somebody like him

to concede before even the results had been counted.

Later that evening, Nigel Farage came

out again with a second concession speech,

and this one was a bit more specific than the first.

In this one he said that Remain had won,

and that he had heard this from some friends

in the City who run some pretty big private polling.

And that really shook me.

That was when I really realized, wait a minute.

The pollsters secretly working with hedge funds,

and Nigel had access to that information,

before any of the votes were even announced.

That was the moment when I realized

there's a lot here for us to look into.

First thing that I did was I created a very detailed

timeline of everything that happened politically,

everything that the pollsters were doing

and how the markets were reacting.

We had to try to identify the polling firms that were

involved and the hedge funds that they were working for.

So we had these two giant haystacks

that we kinda had to go searching for needles in.

We call this a mosaic investigation.

You gather all the pieces that you can

and you build a mosaic.

It's not a perfect picture, but it's a good picture

and one that you can kind of see what happened.

So we set out to interview as many

of the polling company employees,

former employees we started with

so as not to alert them to what we were doing.

And people were genuinely scared about the implications

of talking to a journalist about something like this.

We basically wanted to know who the buyers were

of these polls and who was conducting them and why.

Two polling firms that were notable in all this,

and that we highlighted in the story,

were YouGov which is one of the fastest-growing

polling companies in the world,

and a company called Survation.

Hello and welcome to Pop Idol.

In the early stages of both YouGov and Survation,

part of their market legend was built around the work

they did on U.K. talent competitions

like Pop Idol and X Factor.

They were really the first to build polling panels,

large groups of people that were available to them online

that they could tap with sort of the press of a button.

What was interesting about those polls

is it was an early indicator that you didn't need to know

the outcome of the actual competition.

You didn't need to know who won X Factor.

All you needed to know was who was gonna vote

for which candidate on which particular week in X Factor,

for you to then be able to make a market bet.

For the Brexit referendum, the senior members

of the polling industry told the press that it was not

possible to do a regular exit poll for this event.

Their normal methods, their normal data gathering

simply wouldn't work in this context.

What they didn't say was they were secretly

doing it for hedge funds at the same time,

who were trying to profit on the day

from the ultimate inside information

which was an exit poll showing how British people had voted.

Hedge funds are among the

most sophisticated players in financial markets.

What they're looking for is an edge,

some sort of insight that no one else has

that they can use to make their trading profits

and make money for their investors.

If the markets were deciding this referendum,

they would already have called it for Remain.

The pound is absolutely surging on the markets.

But the pound kept going to new highs

all throughout the evening.

If you're a hedge fund with access to information

showing you that actually, the opposite is likely to happen,

then you're in an incredibly good place

because you can play that market all the way up to the top.

Short selling is essentially a bet in a given direction.

The bet is that something will fall in value.

So the higher the pound is pushed up,

the more money you make when it

comes back down the other side.

Hedge funds and banks were willing to pay

comparatively enormous sums for the data

that polling firms were selling

because it allowed them to trade so profitably.

$100 million, $160 million,

$300 million in a single day.

When you're looking at the definition of insider trading,

insider trading is when you have access to

and trade on non-public, market-moving information.

In this country, exit polling data is

criminally defined as non-public information.

It is a crime to provide it to the public

or any section of the public before the polls are closed.

Polling companies were streaming it all day long

to their secret hedge fund clients

long before the polls were closed

so that they could trade on how people

were voting while they were still voting.

I hope and pray that my sense of this tonight is wrong.

Nigel Farage does seem to think

that the referendum is lost.

The results as they've been coming through this evening,

rather I think cast doubt, very early stage, on Mr. Farage's

rather low-key approach to what's going on.

So on the evening of the Brexit vote

after the markets had closed,

the concession speeches which Nigel gave

certainly did drive markets higher.

What we wanted to understand was

why did he concede that night?

What information did he have when he made those concessions?

What was going through his mind?

And whether he had access to some of the private polling

that we had identified that was being done by hedge funds?

So we really had to figure out a way to try

and get to the bottom of some of this

and we asked Nigel to come to lunch with us.

So we met Nigel Farge at Sweetings.

That was on Kit's suggestion

and it was a good one because it turns out that

Nigel was the third generation of his family

who had been eating at Sweetings.

It's kind of a strange venue.

It feels like stepping back into the 1950s.

We went in through the door with him.

And he immediately had a go at the

Spanish host and waiter for being Spanish.

I'd never eaten oysters before,

and Nigel Farage insisted that I try oysters.

About halfway through the meal,

our attention certainly changed to our story.

And we started asking him about his concession speeches.

If we'd just tried to call him up and ask those questions,

he would have hung up the phone.

Or if we knocked on his door, he would have shut the door.

But he felt, I think, compelled at that point

to give us full answers and we got them.

He certainly confirmed to us that in between

at least the beginning of the first concession

and the second concession, he had spoken to

Damien Lyons Lowe at Survation.

Damien Lyons Lowe is the founder and the CEO of Survation.

He built Survation's reputation in the early days

by polling in a way that drove UKIP's results higher.

That immediately brought him

to the attention of Nigel Farage

and he became Nigel Farage's pollster and UKIP's pollster,

and a very key political advisor for Nigel Farage.

Nigel knew from his favorite pollster

Leave had won before he gave at least

one of his concessions that really pushed the

market in the wrong direction that night.

So that was pretty critical for us to find out.

On the night that he gave the concession speech,

we do know there were others within UKIP and

within the Leave EU campaign who were very curious

within the Leave EU campaign who were very curious as to why he was going on air saying that Leave had lost

as to why he was going on air saying that Leave had lost

because they too had access to this private polling data

which showed that Leave had won.

The reasons he gave to us that he made those concessions

were simply that he had an attack of nerves, essentially.

When the moment came he got jittery,

and nervous, and lost faith.

He described being in a sort of black despair and a gloom

about what the outcome would be and losing hope.

What his personal dealings were

we're not sure of but we're still looking.

This whole process was us building

a very complicated jigsaw from scratch

and it perhaps wasn't right until the end

of the reporting process that we really saw

the whole picture in all its complexity.

The fallout was massive.

I mean we were really surprised that a story about

derivatives, essentially, was like

the third biggest trending thing on Twitter.

And it didn't take long for U.K. lawmakers

in both Houses of Parliament to start calling

for official inquiries into this.

It matters to different people for different reasons.

It matters if you're a trader because it matters

if someone else has an unfair advantage over you.

It matters if you care that a handful of people

can make huge sums of money by betting on political events

that shape our future and using information that would be

illegal for you or I to look at.

I think it matters if politicians are involved in this

and we should know more about it.