The Securities and Exchange Commission has subpoenaed several major Wall Street lenders for information tied to the near-collapse of AI-focused hedge fund Situational Awareness, as regulators scrutinize the role of heavy leverage in one of the most dramatic hedge fund unwindings in recent memory.
The agency is seeking details about Situational Awareness's trades, its use of leverage, and communications between the fund and its lenders, according to a source familiar with the matter. The banks named in the inquiry include Goldman Sachs, JPMorgan, Citigroup, and Bank of America.
Situational Awareness, led by former OpenAI researcher Leopold Aschenbrenner, saw its assets plunge from roughly $45 billion to around $10 billion in late July after the fund was caught in last month's tech sell-off. The fund, which reportedly operated with leverage of up to 400%, was forced to unwind a portfolio of large, concentrated positions — including holdings in SK Hynix and CoreWeave — after losses triggered a series of margin calls from its prime brokers.
Citadel, Ken Griffin's multi-strategy hedge fund, stepped in to acquire those positions at a reported discount of around 10%. Griffin disclosed in an investor letter on Friday that Citadel has since offloaded approximately 80% of the risk associated with the Situational Awareness portfolio. SK Hynix and CoreWeave have both rallied since the forced sale.
Goldman Sachs and JPMorgan declined to comment on the subpoenas. CNBC has also contacted Citigroup and Bank of America for comment, the outlet noted.
Situational Awareness said in a statement that it would cooperate fully with the inquiry. "It is to be expected that regulators would closely examine any funds that are high profile, produce significant returns, or have particularly dramatic drawdowns," the fund said. "We are a highly-regulated business and will cooperate to the fullest extent with any regulatory request."
Regulators and observers have stressed that the information request does not constitute an accusation of wrongdoing against any of the banks or the fund itself. Such inquiries can conclude without any enforcement action.
The episode has drawn renewed attention to the degree to which leverage is underpinning parts of the broader AI investment boom, with large, concentrated bets on AI-related equities increasingly financed through prime brokerage relationships with major financial institutions.
The New York Times first reported the subpoenas. Whether the SEC's review escalates into a formal investigation — and what, if any, consequences follow for either the fund or its lenders — remains to be seen as regulators gather the documentary record of one of 2026's most closely watched financial blow-ups.
Disclaimer