The Securities and Exchange Commission has reportedly issued subpoenas to several major Wall Street lenders to gather more information about their involvement in the near-collapse of an AI-focused hedge fund.
Authorities are investigating the fund’s trades, leverage, and communications with investment banks, including Goldman Sachs, JP Morgan, Citigroup, and Bank of America.
The hedge fund experienced a dramatic decline from approximately $45 billion to around $10 billion in late July following a significant tech sell-off.
Led by former OpenAI researcher Leopold Aschenbrenner, the fund was compelled to unwind much of its publicly listed, concentrated, and leveraged positions such as SK Hynix and CoreWeave after losses triggered margin calls from its prime brokers.
Citadel, the multi-strategy hedge fund led by Ken Griffin, stepped in to purchase some of these positions at a discount estimated at about 10%.
Griffin indicated in a recent investor letter that Citadel has since divested roughly 80% of the risk associated with the fund’s portfolio. Since then, both SK Hynix and CoreWeave have seen their share prices rally.
Source (CNBC)
