The SEC sent subpoenas to major Wall Street banks over their dealings with Situational Awareness, an AI hedge fund that nearly collapsed last month. Bank of America ranked among the fund's largest counterparties. Citi ranked among the fund's largest counterparties. Goldman Sachs ranked among the fund's largest counterparties. JPMorgan Chase ranked among the fund's largest counterparties, according to a regulatory filing. Investigators requested the timing of specific trades. They requested messages about borrowed money. They told the banks to preserve every record tied to the San Francisco firm. Three people briefed on the outreach described the requests to the New York Times. Situational Awareness has not been accused of wrongdoing. A Situational Awareness spokesman said regulatory scrutiny was predictable for high-profile funds with significant returns or dramatic drawdowns. The fund ran more than $30 billion at its peak. It borrowed tens of billions more. Leopold Aschenbrenner founded the fund roughly two years ago. Aschenbrenner is a 24-year-old former OpenAI researcher. The fund held $8.5 billion in protective put options in March. Those options had largely disappeared by June 30. The fund instead held $12.5 billion in outright long positions by June 30. AI stocks declined in late July. Traditional technology stocks that the fund had shorted rose during that period. Margin calls followed. The portfolio fell about 67%. Citadel bought the public book at a roughly 10% discount. Mining stocks reached a quarter of the fund's book. The positions reached $1.99 billion in the final 13F filing. Core Scientific led the mining-stock positions. Riot Platforms led the mining-stock positions. IREN led the mining-stock positions. Citadel later cleared the miner overhang through nearly 100 block trades. Jamie Dimon warned this month that margin debt had reached records. An SEC investigation may never produce a case. The gathered documents could show how long the banks funded one concentrated AI bet before withdrawing credit. Situational Awareness still holds a stake in Anthropic. Anthropic is considering a public listing. That stake is now the clearest measure of what survived July. The banks and SEC declined to comment.
SEC Investigates Wall Street Banks Over $30B AI Fund Dealings
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Summary
The SEC is investigating Wall Street banks including Bank of America, Citi, Goldman Sachs, and JPMorgan Chase over their dealings with Situational Awareness, a San Francisco-based AI fund that once held $30 billion. The subpoenas target trade timing, borrowed money, and related records. The fund saw a 67% drop in late July due to margin calls and market shifts. Citadel bought the public book at a 10% discount. Traders are watching key support and resistance levels as the fallout could impact risk-to-reward ratios in AI-driven strategies.
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