SEC investigates Situational Awareness hedge fund trades and subpoenas Wall Street banks

The U.S. Securities and Exchange Commission is investigating the near-implosion of Situational Awareness, a prominent AI-focused hedge fund run by 24-year-old former OpenAI researcher Leopold Aschenbrenner. Regulators issued subpoenas to major Wall Street lenders, including Goldman Sachs and JPMorgan Chase, demanding trade timing records and communications regarding the fund's leverage. The probe follows a July 2026 market downturn that erased 67% of the fund's portfolio value and forced a discounted fire sale of its assets to rival Citadel.

SEC subpoenas Wall Street banks

• ▪The Securities and Exchange Commission warned the subpoenaed banks to preserve any information regarding the San Francisco-based hedge fund Situational Awareness
• ▪The U.S. Securities and Exchange Commission sent subpoenas to major Wall Street banks seeking information about the trading and leverage of the AI-focused hedge fund Situational Awareness
• ▪The subpoenaed lenders of Situational Awareness include Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase

Situational Awareness July meltdown

• ▪Situational Awareness nearly imploded in late July 2026 after a broad selloff in global chip and artificial intelligence stocks roiled its leveraged bets
• ▪The portfolio value of Situational Awareness fell 67% in July 2026 alone, according to a letter the fund sent to its investors
• ▪Situational Awareness was forced to sell most of its public equities portfolio to rival firm Citadel at a discount during its July 2026 meltdown

Hedge fund leverage practices

• ▪At its peak, Situational Awareness managed more than $30 billion and borrowed tens of billions of dollars more to magnify its investment bets
• ▪Hedge funds routinely borrow capital from prime brokers to magnify bets, but these positions can trigger margin calls when markets move in the opposite direction

Leopold Aschenbrenner fund background

• ▪Situational Awareness holds a stake in the artificial intelligence company Anthropic, whose chief executive Dario Amodei is married to Leopold Aschenbrenner's wife
• ▪Situational Awareness was founded in 2024 by Leopold Aschenbrenner, a 24-year-old former researcher at OpenAI

Trade timing investigation

• ▪The Securities and Exchange Commission is investigating communications between Situational Awareness and its lenders regarding the fund's use of leverage
• ▪The Securities and Exchange Commission is investigating the specific timing of the trades that triggered margin calls at Situational Awareness

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