The U.S. Securities and Exchange Commission (SEC) has issued subpoenas to several major Wall Street banks that provided financial backing for trading bets placed by the AI-focused hedge fund Situational Awareness, prior to its near-collapse amid a selloff in technology stocks.

According to two sources familiar with the investigation, the U.S. market regulator is seeking detailed transaction records from Situational Awareness, as well as communication logs between the fund and the lending banks that supplied its leverage.

Regulatory filings show that Goldman Sachs, JPMorgan, Citibank, and Bank of America all acted as partner institutions for the hedge fund. In recent years, extending credit to hedge funds has become an increasingly vital and lucrative segment of Wall Street banking operations.

The AI-focused fund is helmed by 24-year-old Leopold Aschenbrenner, a former OpenAI employee. Within less than two years, the fund expanded to over $20 billion in assets under management, generating outsized returns through concentrated, leveraged bets on AI-related equities.

When technology stocks experienced a violent selloff in July, Situational Awareness found itself in deep trouble, emerging as one of the largest casualties of the market downturn. After incurring substantial losses, the San Francisco-based firm was forced into an emergency liquidation within 24 hours, selling the vast majority of its stock positions to Citadel.

In a statement, Situational Awareness said: "For funds that draw significant market attention, whether for achieving high returns or suffering sharp drawdowns, close regulatory scrutiny is expected. We operate under strict oversight and will fully cooperate with all regulatory inquiries."

The fund has not yet been accused of any wrongdoing. Sources caution that the SEC's probe is currently in the information-gathering stage only.

Citibank, Bank of America, Goldman Sachs, and JPMorgan all declined to comment, and the SEC also declined to respond.

Following the completion of the asset sale to Citadel, Aschenbrenner said he accepts "full responsibility" for the series of events that triggered the rapid losses. He stated that the fund will continue to operate and trade public equities, but will no longer borrow from banks to finance its investment positions.

Earlier reports indicated that Citadel acquired the portfolio at a discount of approximately 10%. Earlier this month, Ken Griffin's Citadel informed investors that it had disposed of more than 80% of the portfolio through nearly 100 block trades, with total transaction volume exceeding $4 billion.