The U.S. Securities and Exchange Commission has issued subpoenas to four major banks as part of an investigation into the collapse of Situational Awareness, a high-profile hedge fund that suffered a 67% portfolio wipeout in July following leveraged bets on semiconductor stocks.
The probe focuses on the fund’s rapid rise and fall, which included stakes of $5.7 billion in SanDisk and $5.6 billion in Micron at the end of June, accounting for more than half of its U.S. equity portfolio. SanDisk’s shares tumbled nearly 47% in July, while Micron declined roughly 29%, triggering forced liquidations and a near-total unwind of the fund’s positions.
Among the institutions receiving subpoenas are Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase, according to people briefed on the matter. The SEC’s outreach follows reports that Situational Awareness, founded in 2024, had amassed over $30 billion in assets alongside tens of billions in borrowed funds.
The fund’s collapse prompted Citadel to acquire a portion of its public equity portfolio at a 10% discount in a fire sale. By August 21, Citadel reported that it had unwound more than 80% of the acquired risk, executing over 100 block trades valued at more than $4 billion over three weeks. Citadel’s flagship Wellington multistrategy fund posted a 5.94% return in July, its strongest monthly performance since 2022.
Situational Awareness’s founder, Leopold Aschenbrenner, a former OpenAI researcher, has not publicly commented on the investigation. The fund’s spokesman stated that regulators often scrutinize high-profile funds with significant returns or dramatic drawdowns and that the firm would fully cooperate with any requests.
