Prime brokers act as shadow banks — they seize portfolios at first sign of equity impairment and fire-sell to multi-strats
When a fund's equity approaches zero, prime brokers (Goldman, BofA) contractually take control and liquidate at any price to crystallize a known loss rather than risk a larger one; they preferentially allocate the distressed book to multi-strat platforms (Citadel, Millennium) that have the balance sheet and market-making capacity to absorb it, creating a recurring 'rescue buyer' franchise.