US SEC sends subpoenas to Wall Street banks over Situational Awareness, NYT reports
The inquiry seeks details on the fund’s leverage and trades after its value fell from $45 billion to $10 billion, Reuters reported.
- The Securities and Exchange Commission subpoenaed major Wall Street banks yesterday, including Goldman Sachs, JPMorgan, and Citigroup, seeking records on the AI-focused hedge fund Situational Awareness's trades, leverage, and communications.
- Led by former OpenAI researcher Leopold Aschenbrenner, Situational Awareness plummeted from about $45 billion to around $10 billion in late July after a tech stock downturn forced the fund to unwind large, concentrated positions.
- Leverage of up to 400% amplified losses and triggered margin calls among prime brokers, exposing systemic risks that regulators are now investigating within the broader AI-focused investment sector.
- Ken Griffin's Citadel purchased the distressed positions at a discount of around 10% and has since offloaded about 80% of the risk, helping CoreWeave and Hynix stocks rally.
- Situational Awareness stated "it is to be expected that regulators would closely examine any funds" with high returns or dramatic drawdowns, pledging full cooperation as regulators noted inquiries can conclude without enforcement.
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30 Articles
The Securities and Exchange Commission (SEC, the U.S. Securities Commission) sent subpoenas to large Wall Street banks in relation to the Situational Awareness hedge fund, according to people familiar with the subject. The information requested refers to the fund's trading activity, which was pressured and forced to close many of its positions last month, sources said, which they asked not to be identified when discussing a confidential matter. …
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