The U.S. Securities and Exchange Commission is investigating AI hedge fund
Situational Awareness after a near-collapse and has issued subpoenas to major
Wall Street banks that provided leverage to the fund. The SEC requested trade
timestamps, communications between the banks and lenders about borrowed funds,
and ordered preservation of all materials related to the fund. Situational
Awareness, founded by former OpenAI researcher Leopold Aschenbrunner, peaked at
over $30bn AUM and had borrowed tens of billions of dollars to lever positions.
Late last month, declines in popular AI stocks and rallies in legacy tech names
it had shorted produced rapid losses that forced a "sell-off liquidation"; the
fund sold most of its equity portfolio to Citadel at a discount. The SEC said
the probe is in its early stages and does not imply enforcement; the fund is not
accused of wrongdoing and says it will "fully cooperate with any regulatory
request."
