Bank of America CEO warns AI hedge fund collapse signals market risk
Bank of America chief executive Brian Moynihan warned that the collapse of the AI-focused hedge fund Situational Awareness signals broader market risks, after Citadel reported its flagship funds posted their strongest July performance in years thanks to a discounted purchase of the fund’s distressed public-stock portfolio. According to CNBC, Situational Awareness, run by Leopold Aschenbrenner, began liquidating its public-equity holdings after steep declines in AI-related stocks and a losing short bet, triggering margin calls and a sale of assets to Citadel.
Business Insider reported that Citadel bought a large portion of the portfolio at a discount, and Fortune noted that Aschenbrenner sold most of the fund to Citadel while offering personal calls to investors. The Free Press said the fund lost roughly $35 billion in two weeks, illustrating the impact of aggressive leverage and concentration.
