Arabic version: موينيهان يصف شبه انهيار صندوق تحوط بأنه جرس إنذار

According to Cnbc, Bank of America CEO Brian Moynihan described the recent near-collapse of AI hedge fund Situational Awareness as a warning shot for financial markets shaped by elevated valuations and borrowed money.

Situational Awareness, run by Leopold Aschenbrenner, was forced last week to sell most of its public equities to Citadel in a fire sale after its artificial-intelligence bets soured. Bank of America was one of the fund’s prime brokers, providing trade execution and leverage alongside Goldman Sachs and JPMorgan Chase.

“These are all warning shots,” Moynihan told CNBC’s Andrew Ross Sorkin. “Valuations get out, leverage in the system gets there. You have to be careful.”

Moynihan said Bank of America would have been “fine” even without the Citadel transaction, which provided capital for Situational Awareness to repay its banks. He said firms should assess what happened and consider whether lessons should change their approach.

His comments point to renewed scrutiny by major prime brokers of their exposure to highly leveraged investment firms. Moynihan said the tendency after sharp stock-market gains is to tighten underwriting standards “just a hair” and make adjustments.