SEC probes Wall Street banks over ties to $30B AI hedge fund Situational Awareness

The U.S. Securities and Exchange Commission has issued subpoenas to several major Wall Street banks seeking information about their dealings with Situational Awareness, a San Francisco-based AI-focused hedge fund that came close to collapsing last month, according to people familiar with the outreach. Regulatory filings show Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase among the fund's largest counterparties. The SEC requests focus on the timing of certain trades and communications tied to borrowed money, and instruct banks to preserve all records connected to the firm, the people said. Situational Awareness has not been accused of wrongdoing. A spokesperson for the fund said heightened scrutiny is common for high-profile managers that post outsized gains or suffer sharp drawdowns. The fund managed more than $30 billion at its peak and borrowed tens of billions more. It was founded about two years ago by Leopold Aschenbrenner, a 24-year-old former OpenAI researcher. In March, the fund held $8.5 billion in protective put options, positions that had largely vanished by June 30. By that date, it instead reported $12.5 billion in outright long positions. Late July brought the stress test: AI stocks fell, while more traditional technology shares that the fund had shorted rose. Margin calls followed, and the portfolio dropped about 67%. Citadel acquired the fund's public equity book at an estimated 10% discount. Mining stocks grew to roughly a quarter of the portfolio, reaching $1.99 billion in the final Form 13F filing. Core Scientific, Riot Platforms and IREN were among the largest mining-related holdings. Citadel later worked through the remaining miner exposure via nearly 100 block trades. JPMorgan CEO Jamie Dimon warned this month that margin debt has hit record levels. People familiar with the matter cautioned the SEC's review may not result in an enforcement case, but the documents could clarify how long banks financed a concentrated AI wager before tightening credit. Situational Awareness still owns a stake in Anthropic, which is weighing a public listing, and that position is seen as the clearest indicator of what remained after July's selloff. The SEC and the banks declined to comment.