The U.S. Securities and Exchange Commission has issued subpoenas to Goldman Sachs, JPMorgan, Citigroup and Bank of America as part of an inquiry into loans extended to Situational Awareness, the AI-focused hedge fund that lost 67% of its value in July, Reuters reported on Aug. 24, citing a person familiar with the matter.
The SEC is seeking information about the timing of trades that triggered margin calls and the banks' communications with the fund regarding its leverage levels. The New York Times first reported the subpoenas. The regulator has told banks to preserve information related to the hedge fund, though no wrongdoing has been alleged and the banks are not necessarily targets, according to Reuters.
Situational Awareness, led by former OpenAI researcher Leopold Aschenbrenner, said in a statement that scrutiny of high-profile funds with dramatic drawdowns is expected and that it would cooperate fully. The SEC and the four banks declined to comment.
The fund reportedly launched in 2024 and gained 439% in the first half of 2026 using almost four times leverage, according to RCK Analytics. At the end of June, SanDisk and Micron represented 55% of its $20.24 billion U.S. stock portfolio. When AI-related stocks reversed, the Philadelphia Semiconductor Index fell almost 30% from its June high, and brokerages including Goldman and JPMorgan demanded additional margin. The fund was unable to meet the calls and sold its entire public equities portfolio to Citadel.
Aschenbrenner told investors the fund "came closer to permanent capital impairment than is acceptable to us." Citadel, which manages about $77 billion, has since sold more than 80% of the acquired shares through nearly 100 block trades worth more than $4 billion, according to a letter seen by Reuters. The Wall Street Journal reported that Aschenbrenner had at one point been handling assets worth $100 billion, much of it raised through loans, and attempted to liquidate almost all of its pre-IPO Anthropic stake overnight.
Despite the collapse, the underlying AI memory thesis has not entirely failed: Micron posted record third-quarter revenue of $41.46 billion. The episode instead highlights the dangers of concentrated leverage in non-bank funds, a risk the Bank of England and the Bank for International Settlements have warned about, citing the 2021 Archegos collapse as a cautionary example.
