The U.S. Securities and Exchange Commission (SEC) is actively investigating the near-collapse of the AI-focused hedge fund, Situational Awareness, which suffered a staggering 67% portfolio wipeout in July. In response, the SEC has issued subpoenas to several major Wall Street banks, including Goldman Sachs and JPMorgan, to examine their roles and trading practices linked to the fund. Situational Awareness had heavily invested in stocks such as Micron and Sandisk, amassing stakes worth billions before its dramatic downturn. As the regulatory scrutiny intensifies, the incident raises questions about leverage in hedge fund operations and the stability of the AI investment landscape.