US SEC probes discounted liquidation of "AI Stock Guru" fund

According to The New York Times, the U.S. Securities and Exchange Commission (SEC) is investigating the near-collapse of AI hedge fund Situational Awareness, and has issued subpoenas to major Wall Street banks that participated in the fund’s trading and provided leverage capital. People familiar with the matter told the outlet that the SEC is demanding the banks provide details on the fund’s trading timelines, its communications with lenders regarding borrowed funds, and preserve all documents related to the fund. Founded by former OpenAI researcher Leopold Ashenbrenner, Situational Awareness once generated robust returns amid the AI boom. At its peak, the fund managed over $30 billion in assets and borrowed tens of billions of dollars to amplify its investments. But late last month, as shares of leading AI firms declined and the traditional tech stocks it had shorted rose, the fund’s losses widened rapidly, forcing it into a "fire sale" of positions and selling most of its stock portfolio to Citadel at a discount. The SEC noted that the investigation is still in its early stages and does not guarantee penalties will be imposed. No violations have been alleged against Situational Awareness. The fund said it will "fully cooperate with any regulatory requirements".