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JPMorgan curbed lending to Situational Awareness after AI losses, source says
Reuters • • business
Key Points:
- The AI-focused hedge fund Situational Awareness, founded by former OpenAI researcher Aschenbrenner in 2024, liquidated most of its public equity holdings to Citadel following a global chip-stock selloff that caused significant losses on its leveraged bets.
- The fund's portfolio value dropped 67% in July, triggering margin calls and leading JPMorgan, a key lender, to end its lending relationship with Situational Awareness.
- Despite the losses, the fund expressed optimism about the portfolio's fundamentals but acknowledged nearing unacceptable levels of permanent capital impairment.
- The U.S. Securities and Exchange Commission has issued subpoenas to Wall Street banks working with the fund to investigate its trades and leverage usage.
- Major banks including BofA, JPMorgan, Goldman Sachs, and Citi declined to comment on the situation, and Situational Awareness did not respond to Reuters' requests for comment.
