The U.S. Securities and Exchange Commission (SEC) has launched an investigation into Situational Awareness, the AI-focused hedge fund founded by Leopold Aschenbrenner, following the fund’s sharp asset decline and the forced liquidation of part of its portfolio.
As part of the investigation, the SEC has requested information from several major Wall Street banks, including Goldman Sachs and JPMorgan, seeking details on transactions that led to margin calls and the fund’s extensive use of leverage. Regulators are examining whether the fund’s financing arrangements and trading practices complied with applicable securities rules.
The probe follows a turbulent period for Situational Awareness, which suffered steep losses after highly leveraged bets on AI-related assets unraveled during the recent market correction. The investigation highlights growing regulatory scrutiny of hedge funds employing aggressive leverage and concentrated positions in rapidly expanding sectors such as artificial intelligence.
