The SEC Investigates 'AI Stock Guru' Fund's Discounted Liquidation Event

BlockBeats News, August 25th, according to The New York Times, the U.S. Securities and Exchange Commission (SEC) is investigating the recent near-collapse event of the AI hedge fund Situational Awareness, and has issued subpoenas to Wall Street's major banks that participated in trading with the fund and provided leverage.

According to sources familiar with the matter, the SEC has requested banks to provide the timing of the fund's trades, as well as information on their communication with the lender regarding borrowed funds, and has requested the preservation of all documents related to the fund.

Situational Awareness, founded by former OpenAI researcher Leopold Ashenbrenner, once achieved high returns during the AI boom. At its peak, the fund managed assets exceeding $30 billion and leveraged investments by borrowing tens of billions of dollars. However, at the end of last month, as the stock prices of popular AI companies fell and traditional tech stocks targeted for shorting rose, the fund's losses quickly escalated. It was eventually forced to conduct a "fire sale liquidation" and sold a majority of its stock portfolio to Citadel at a discount.

The SEC stated that the investigation is still in its early stages and does not necessarily mean there will be penalties. Situational Awareness has also not been accused of any wrongdoing. The fund said it will "fully cooperate with any regulatory requirements."