The U.S. Securities and Exchange Commission (SEC) has launched an investigation into the recent near-collapse of the AI-focused hedge fund Situational Awareness. The regulatory body has issued subpoenas to major Wall Street banks, seeking detailed information on the fund's trading activities, internal communications, and other relevant materials. Situational Awareness, founded by a former OpenAI researcher, experienced a meteoric rise during the AI boom, managing over $30 billion in assets at its peak. The fund leveraged its holdings by borrowing billions more to amplify its bets on AI-related stocks. However, as the market sentiment shifted—with AI company stock prices declining and shorted traditional tech stocks rallying—the fund incurred substantial losses. This forced it into a fire sale liquidation, offloading most of its stock portfolio at a discounted price to Citadel. The SEC's investigation is still in its preliminary stages, and no formal accusations of wrongdoing have been made against the fund. In response, the fund has stated its commitment to fully cooperate with regulatory authorities and comply with all requirements.