The Securities and Exchange Commission has sought information from banks that provided financing to Situational Awareness, Leopold Aschenbrenner’s AI-focused hedge fund that suffered billions of dollars in losses last month before selling the bulk of its portfolio. Situational Awareness was one of the fastest-growing hedge funds in years before its swift unwind. At its peak, the fund controlled some $100 billion in assets, supercharged by enormous sums Aschenbrenner borrowed from banks to magnify his AI stock bets, from semiconductors to software.

The commission often investigates disorderly trading in markets or cases in which highflying fund managers suffer sudden losses. Investigators typically seek to learn whether the fund manager’s trading or risk-management practices differed from what they told their investors they would do. The SEC hasn’t made any formal allegations of wrongdoing and sometimes closes investigations without taking enforcement action. “It is to be expected that regulators would closely examine any funds that are high profile, produce significant returns, or have particularly dramatic drawdowns,” a spokesman for Situational Awareness said in an email. “We are a highly-regulated business and will cooperate to the fullest extent with any regulatory request.” The New York Times earlier reported the investigation.

Aschenbrenner’s fund in July faced steep losses from tumbling AI stocks, and he was desperate for a way out of his investments. Banks issued margin calls, or demands for more collateral to back their lending. Short sellers were targeting Aschenbrenner’s favorite stocks.

After considering a sale of part of his fund’s $5 billion stake in Anthropic, the hedge-fund manager agreed to a fire sale of the bulk of its stock portfolio to Ken Griffin’s investment firm Citadel. Griffin told investors last week that the firm has since sold some 80% of the holdings.