SEC subpoenas banks over Situational Awareness trading
The Securities and Exchange Commission has sent subpoenas to major Wall Street banks seeking details on Situational Awareness trading, leverage, and communications with lenders, according to people briefed on the outreach.
(New York Times) -- Regulators sent subpoenas to major Wall Street banks seeking information about the trading of Situational Awareness, three people briefed on the outreach said....
The Securities and Exchange Commission recently sent subpoenas to banks that handled the hedge fund's calamitous trading and that fed it borrowed money to supersize its bets, according to three people briefed on the outreach who were not permitted to discuss it publicly.
The subpoenas asked for details on the timing of Situational Awareness's trades and for its communications with lenders about the money it was borrowing, also known as "leverage," two of those people said.
The subpoenas additionally warned the banks to preserve any information regarding the San Francisco hedge fund.... "It is to be expected that regulators would closely examine any funds that are high profile, produce significant returns or have particularly dramatic drawdowns," a Situational Awareness spokesman said in a statement. "We are a highly regulated business and will cooperate to the fullest extent with any regulatory request." The S.E.C. declined to comment....
Spokespeople for Bank of America, Citi, Goldman Sachs and JPMorgan declined to comment....
Situational Awareness was forced into a fire sale.
It wound up selling most of its stock portfolio to a rival, Citadel, at a discount. (A Citadel spokesman declined to comment when asked whether the firm had received a subpoena.)