SEC Investigates AI Hedge Fund Situational Awareness Near Collapse

The U.S. Securities and Exchange Commission (SEC) is investigating the recent near-collapse of the AI hedge fund Situational Awareness and has issued subpoenas to major Wall Street banks involved in trading the fund and providing leveraged financing. The SEC has requested banks to provide information on the timing of the fund's trades and communications with lenders, and has demanded the preservation of all materials related to the fund. The investigation is still in its early stages and does not necessarily imply that penalties will be imposed; Situational Awareness has not been accused of any wrongdoing. The fund was founded by former OpenAI researcher Leopold Aschenbrenner and had achieved high returns during the AI boom, managing over $30 billion at its peak and borrowing hundreds of billions to amplify investments. However, at the end of last month, as the stock prices of popular AI companies fell and traditional tech stocks that were shorted rose, the fund's losses rapidly escalated, ultimately forcing it to liquidate its positions by selling most of its stock portfolio at a discount to Citadel.

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