SEC subpoenas banks after AI hedge fund lost $35 billion
What's new: Regulators are seeking records on leverage, trades and bank communications tied to the fund's late-July plunge.
The Securities and Exchange Commission has subpoenaed several major Wall Street banks as it examines their dealings with AI-focused hedge fund Situational Awareness after the firm’s near collapse, Reuters reported. The fund, led by former OpenAI researcher Leopold Aschenbrenner, fell from roughly $45 billion to about $10 billion in late July during a tech sell-off. The inquiry is focused on the fund’s trading, heavy use of leverage and communications with prime brokers including Goldman Sachs, JPMorgan, Citigroup and Bank of America. Situational Awareness had large public positions including SK Hynix and CoreWeave and was forced to unwind much of its portfolio after margin calls. Citadel later bought the positions at a discount of about 10%.