Washington’s scrutiny has followed a bruising AI-market selloff that pushed the high-profile hedge fund Situational Awareness into rapid liquidations.

Last month, the fund began selling equity holdings after a barrage of margin calls during the AI stock rout. Ken Griffin’s Citadel then bought the bulk of Situational Awareness’s public-stock bets, according to people familiar with the matter.¹

The Securities and Exchange Commission has now sent subpoenas to major Wall Street banks seeking information related to the fund’s trading activity. The agency declined to comment. The request is an inquiry, not an allegation of wrongdoing: an SEC review does not necessarily mean a firm or individual is its target, and it can close without an enforcement action.¹

Situational Awareness cast the review as an unsurprising consequence of its prominence and dramatic reversal. “It is to be expected that regulators would closely examine any funds that are high profile, produce significant returns, or have particularly dramatic drawdowns,” the fund said Monday.¹ It added: “We are a highly-regulated business and will cooperate to the fullest extent with any regulatory request.”¹

The episode puts a sharp question over the mechanics of the fund’s forced exit: regulators are seeking the banks’ account of the trading, while the fund publicly signals cooperation rather than resistance. No enforcement case has been announced.