ANNALS OF TRUMPI$TAN: S.E.C. Investigating Near-Implosion of A.I. Hedge Fund. (Rob Copeland & Matthew Goldstein, NY Times, August 24, 2026)

From The New York Times:

S.E.C. Investigating Near-Implosion of A.I. Hedge Fund

Regulators sent subpoenas to major Wall Street banks seeking information about the trading of Situational Awareness, three people briefed on the outreach said.

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Situational Awareness was founded two years ago by Leopold Aschenbrenner, formerly of OpenAI.Credit...Nicholas Albrecht for The New York Times

By Rob Copeland and Matthew Goldstein

Aug. 24, 2026
Situational Awareness, a once hot A.I.-focused hedge fund led by a 24-year-old, became the talk of Wall Street when it nearly imploded late last month.Now it is attracting attention from securities regulators, too.The Securities and Exchange Commission recently sent subpoenas to banks that handled the hedge fund’s calamitous trading and that fed it borrowed money to supersize its bets, according to three people briefed on the outreach who were not permitted to discuss it publicly.The subpoenas asked for details on the timing of Situational Awareness’s trades and for its communications with lenders about the money it was borrowing, also known as “leverage,” two of those people said. The subpoenas additionally warned the banks to preserve any information regarding the San Francisco hedge fund.The S.E.C. oversees financial markets with an eye toward protecting small investors, and has brought civil cases regularlyagainst investment firms that produced large losses. Any investigation into Situational Awareness would be at its earliest stages, and it’s no guarantee that it would lead to fines or other punishment. The hedge fund has not been accused of wrongdoing.“It is to be expected that regulators would closely examine any funds that are high profile, produce significant returns or have particularly dramatic drawdowns,” a Situational Awareness spokesman said in a statement. “We are a highly regulated business and will cooperate to the fullest extent with any regulatory request.”The S.E.C. declined to comment.At its peak, Situational Awareness managed more than $30 billion, and borrowed tens of billions more. It was a major client of firms including Bank of America, Citi, Goldman Sachs and JPMorgan Chase, according to a regulatory filing.Spokespeople for Bank of America, Citi, Goldman Sachs and JPMorgan declined to comment.Situational Awareness had a fast rise and an even quicker retreat. Founded just two years ago by Leopold Aschenbrenner, a former researcher at OpenAI, it rode the A.I. boom to soaring investment returns.To achieve those results, however, the fund relied on heavy borrowing, as well as complicated and expensive financial instruments that magnify gains — and losses. The latter piled up quickly last month when the stock prices of publicly traded, high-flying A.I. companies dipped. At the same time, shares in more traditional technology companies — which the hedge fund had been betting against — rose, compounding the problem.Situational Awareness was forced into a fire sale. It wound up selling most of its stock portfolio to a rival, Citadel, at a discount.(A Citadel spokesman declined to comment when asked whether the firm had received a subpoena.)Situational Awareness still has some hope. The fund held on to a stake in the A.I. company Anthropic, which has plans to go public at a valuation that could be as high as $2 trillion. Mr. Aschenbrenner’s wife is the chief of staff to Anthropic’s chief executive, Dario Amodei.

Rob Copeland is a finance reporter for The Times, writing about Wall Street and the banking industry.

Matthew Goldstein is a Times reporter who covers Wall Street and white-collar crime and housing issues.

A version of this article appears in print on Aug. 26, 2026, Section B, Page 4 of the New York edition with the headline: S.E.C. Is Investigating The Near-Implosion Of an A.I. Hedge Fund. Order Reprints | Today’s Paper | Subscribe