JPMorgan has stopped lending to Situational Awareness, the AI-focused hedge fund run by Leopold Aschenbrenner, after the July losses that nearly sank it. A source familiar with the matter told Reuters on 11 September 2026 that JPMorgan, one of the fund’s key lenders, had notified Situational Awareness it would end the lending relationship. The Financial Times reported the move first. Goldman Sachs, Citigroup and Bank of America remain active brokers to the fund, which has also recently started working with Clear Street, a New York brokerage. All four banks declined to comment, and the fund did not immediately respond.
The decision lands six weeks after the fund sold most of its public stock portfolio to Citadel, and on the same day CNBC reported that the fund was buying options again. Read together, the two stories describe a manager rebuilding his bets on artificial intelligence infrastructure with far less borrowed money, at the moment Wall Street’s largest bank walks away from financing him.
We covered the collapse itself, the 13F book, the Citadel sale and the regulator’s interest in our earlier report on Situational Awareness, the star AI hedge fund now being probed by the SEC. This article is about the relationship JPMorgan has just ended: what a prime broker actually provides, why a bank would pull its lending from a client that survived, who is still lending to the fund, and why its new trades are built so that no bank can make a margin call on them.
Table of contents
- What Reuters and the FT Reported About JPMorgan
- What a Prime Broker Does, and What JPMorgan Took Away
- Why JPMorgan Would End Lending After a Client Survived
- Who Still Lends to Situational Awareness After JPMorgan
- Clear Street and the Second-Choice Prime Broker Problem
- How the Fund Is Trading Without Borrowed Money
- What the JPMorgan Decision Says About Prime Brokerage
- The SEC Inquiry and the Timing Question
- The Situational Awareness Timeline Through JPMorgan’s Exit
- What Businesses Buying AI Should Take From JPMorgan’s Move
- JPMorgan and Situational Awareness: Frequently Asked Questions
- References
What Reuters and the FT Reported About JPMorgan
The story rests on one anonymous source at Reuters and on the FT’s own reporting. It is worth separating what each outlet actually said before reading anything into it.
The Reuters account
The Reuters report, by Anirban Sen in New York and Utkarsh Shetti in Bengaluru, carries a handful of new facts and a paragraph of context. JPMorgan “cut off lending activity for Leopold Aschenbrenner’s hedge fund Situational Awareness after large losses tied to his AI bets led to a near-collapse”. JPMorgan, described as one of the fund’s key lenders, “notified Situational that it would end its lending relationship after the losses”. Every fact about the JPMorgan decision in that report comes from a single source familiar with the matter.
What the FT account adds
The FT story, headlined “JPMorgan cut off Situational Awareness lending after AI losses”, sits behind a paywall, but Investing.com summarised it the same evening. On that account JPMorgan “terminated its prime brokerage lending relationship”, a decision by “Wall Street’s largest bank” that “cuts off a vital source of leverage” for the fund. The summary adds two details Reuters did not carry: that Aschenbrenner has “pivoted toward boutique Prime Broker Clear Street”, and that Morgan Stanley held early discussions with the fund after its launch but “ultimately declined to establish a banking relationship”.
Curbed, cut off or terminated
The Reuters headline says JPMorgan “curbed” lending. Its first sentence says the bank “cut off” lending activity, and a later one says JPMorgan would “end” the relationship. The FT summary says “terminated”. Those verbs describe different things: a curb is a limit, while a termination is an exit. The body of both reports points to an exit from the financing relationship, so this article treats it as one, while noting what is missing.
What nobody has said
JPMorgan has not commented, and neither has the fund. There is no public figure for how much JPMorgan lent to Situational Awareness at its peak, no date for the notice, no word on whether existing loans were run off or closed, and no reported link between the JPMorgan decision and the SEC inquiry that named the bank last month. Anything beyond those reported facts, including most of the explanations further down, is analysis rather than disclosure.
| Outlet, 11 September 2026 | What it said about the lending | Other detail | Sourcing |
|---|---|---|---|
| Reuters | “Cut off lending activity” and would “end its lending relationship” | Goldman Sachs, Citigroup and Bank of America remain active brokers; Clear Street recently added | One source familiar with the matter |
| Financial Times, via Investing.com | “Terminated its prime brokerage lending relationship” | Morgan Stanley declined a relationship; fund now uses fully paid flex options | FT reporting and people familiar with the matter |
| CNBC | Not covered | Options bought on AMD, Bloom Energy, CoreWeave, SK Hynix, SanDisk and the Roundhill Memory ETF | Sources who spoke to David Faber |
What a Prime Broker Does, and What JPMorgan Took Away
Prime brokerage is the bundle of services large banks sell to hedge funds. The label hides the fact that the bundle can be split, and that is the key to reading the JPMorgan news correctly.
The services in the bundle
A prime broker holds a fund’s cash and securities in custody, clears and settles its trades, lends it shares to sell short and lends it money against its long positions. It also consolidates reporting across every broker the fund trades with. Banks do not charge a headline fee for the package. Most of the revenue comes from the spread on financing and securities lending, which is why clients that borrow heavily are the most profitable ones to serve, and also the riskiest.
Financing is the part that ended
The reports say JPMorgan ended lending. They do not say the bank stopped holding the fund’s assets or executing its trades, although a bank that exits the financing usually has little reason to keep the rest. The distinction matters because a fund can move custody and execution to another broker quickly. Replacing borrowing capacity is harder, because the lenders that remain get to set the price, and the fund has to accept it or borrow less.
Why funds use several prime brokers
Large hedge funds spread their business across several banks, a habit that hardened after Lehman Brothers collapsed in 2008 and some clients could not retrieve collateral held at the failed firm. Using several brokers limits exposure to any one bank. It also means each bank sees only its own slice of the fund’s positions, which became a theme of the regulator’s questions in August, and it is the reason losing one lender of four is survivable.
| Service | What the prime broker does | What losing one lender changes |
|---|---|---|
| Margin financing | Lends cash against the fund’s long positions | Total borrowing capacity shrinks, and the remaining lenders can reprice |
| Securities lending | Lends shares so the fund can sell short | Any shares borrowed for shorts need another lender |
| Custody and clearing | Holds assets and settles trades | Can move to another broker; operational work, not a funding gap |
| Execution | Routes and fills orders | Unaffected while other brokers stay active |
| Consolidated reporting | Combines positions held across brokers | One less feed to reconcile |
Why JPMorgan Would End Lending After a Client Survived
The fund did not fail. Its prime brokers emerged unscathed, according to IFR’s sources, and it still holds about $10 billion. So why would JPMorgan leave now? No party has explained the decision, but the public record points to four pressures that any lender in its position would weigh.
Leverage the bank had already watched unwind
CNBC reported that the fund used leverage of up to 400%, and IFR’s sources put it at as much as four times. At that level a fall of a quarter in the value of the book wipes out the equity underneath it. JPMorgan was one of the lenders calling for more collateral as prices fell in July, so JPMorgan saw that arithmetic from the inside, day by day.
Concentration in a handful of names
The fund’s 13F filing for 30 June showed about $20.24 billion of reportable US holdings, and SanDisk and Micron together made up more than 56% of them. SanDisk fell nearly 47% in July, Micron about 29% and Bloom Energy 32%. For a lender, concentration matters as much as the headline leverage, because correlated names cannot be sold to cover one another when they all fall together.
Recourse was good, but a near miss is still a miss
IFR’s August reporting presented the episode as a success for bank risk management. Its sources said the fund “never missed a margin call”, that dynamic margining had already cut the loan-to-value as prices rose, and that the banks had recourse to the fund’s private holdings, including its Anthropic stake. “There was never any risk of a credit loss,” one senior bank trader said. Bank of America’s chief executive, Brian Moynihan, told CNBC “We’d have been fine”, while conceding that “these are all warning shots”.
A bank can accept all of that and still decide the relationship is not worth the capital. Citadel bought the public book at a discount of roughly 10%. Jonathan Wallen of Harvard Business School told IFR that the discount was “large compared to secondary market block trade discounts”, and that it suggests “5% margins on equity total return swaps may be insufficient to cover fire sale liquidation losses”. A lender reading that asks what margin this client now needs, and whether the client would pay it.
Reputation and regulatory attention
The SEC’s August subpoenas went to all four of the fund’s big lenders, JPMorgan among them. Reuters stressed that such requests do not mean anyone is a target. Even so, the New York Post’s Charles Gasparino wrote in August that Wall Street “always worries about reputational risk, particularly doing business with risk takers on steroids”. For JPMorgan, ending a financing line that already sits inside a regulatory inquiry is the simplest way to stop that exposure growing, whatever the commercial logic.
Who Still Lends to Situational Awareness After JPMorgan
JPMorgan’s exit leaves the fund with most of the banks it started the summer with, plus a newer name. The picture is less settled than the Reuters line suggests, because two earlier reports cut the other way.
Three of the original four stay
A June regulatory filing listed four prime brokers for Situational Awareness, according to IFR’s Jon Macaskill: Bank of America, Citigroup, Goldman Sachs and JPMorgan. Reuters’ source said the other three “remain active brokers” for the fund. That leaves most of the original banking relationships in place, on terms that have not been reported.
In August, every bank was staying
The shift is recent. On 5 August the New York Post reported that JPMorgan, Goldman Sachs, Bank of America and Citigroup “haven’t yet cut off prime broker ties”, and that the banks were “still keen to stand behind” Aschenbrenner because the fund still had about $10 billion, a $5 billion private Anthropic stake and investor lock-ups. The same column warned that “what’s true today might not be the case tomorrow”. Five weeks later, for JPMorgan, it was not.
The Morgan Stanley contradiction
The reporting on Morgan Stanley does not line up. The New York Post said on 5 August that Morgan Stanley’s prime brokerage team had planned to onboard Situational Awareness in September and had no plans to stop. The FT account summarised on 11 September says Morgan Stanley held early discussions after the fund launched but declined to establish a banking relationship. Both could be partly true, with talks that never became an account, but they cannot both describe the position today. Morgan Stanley has not commented publicly.
Banks that said no before the crisis
IFR reported that Barclays was approached to work with the fund and chose not to sign on as a prime broker, and that other banks were contacted too. IFR also reported that some firms declined to offer the fund financing at all. Macaskill read the approaches as a likely attempt to add leverage, and gave second-tier lenders two questions to ask when a fast-growing fund comes calling: “why me?” and “why now?”
| Firm | Reported status | Source and date |
|---|---|---|
| JPMorgan | Ended its lending relationship | Reuters and FT, 11 September 2026 |
| Goldman Sachs | Active broker | Reuters, 11 September 2026 |
| Citigroup | Active broker | Reuters, 11 September 2026 |
| Bank of America | Active broker | Reuters, 11 September 2026 |
| Clear Street | Recently started working with the fund | Reuters, 11 September 2026 |
| Morgan Stanley | Planned onboarding in September, or declined a relationship | New York Post, 5 August; FT via Investing.com, 11 September |
| Barclays | Approached, did not sign on | IFR, 6 August 2026 |
Clear Street and the Second-Choice Prime Broker Problem
The newest name on the list is the one the fund chose, rather than one it kept. That makes it worth a closer look, even though almost nothing about the arrangement is public.
A younger, technology-first broker
Clear Street was founded in 2018 by trader Uri Cohen and runs a single in-house technology stack rather than a patchwork of third-party systems, according to a Briefs report citing people familiar with the arrangement. The firm describes its own platform as real-time and cloud-native. Neither the FT summary nor Reuters gives terms, size or a start date beyond “recently”, and both firms declined to comment.
The second-choice warning
Macaskill’s August column is the sharpest thing written about firms in that position, although it predates this relationship and does not name Clear Street. IFR’s standfirst summed up his argument: being a hedge fund’s second-choice prime broker “means financing the business that the first choice turned down”. He argued that the top-tier banks see trouble earlier than smaller rivals, and closed with Warren Buffett’s poker line from 1987: “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”
Why the fund’s new structure changes that risk
That warning assumed a fund looking for more leverage. The fund’s September activity points the other way. If Situational Awareness is buying fully paid options, as the FT summary says, a broker in Clear Street’s seat is providing execution and custody for positions that cannot be margin-called, rather than lending against concentrated stock. That is a very different credit exposure from the one JPMorgan just gave up.
How the Fund Is Trading Without Borrowed Money
The other half of the 11 September news is what the fund is doing instead of borrowing. It explains why losing JPMorgan’s lending hurts less than it would have in June.
What CNBC reported
CNBC reported, citing sources who spoke to David Faber, that Situational Awareness had been buying options on Advanced Micro Devices, Bloom Energy and CoreWeave late the previous week and early that week. It was also active in SK Hynix and SanDisk, and bought options on the Roundhill Memory ETF, which trades as DRAM. CNBC said it was unclear whether the fund had taken in new money or was using assets left after the July rout. Stocktwits added that it was also unclear whether the positions were bullish or bearish.
The flex options in the FT account
The FT summary goes further. It says Aschenbrenner told investors he would reboot the fund’s hybrid public and private strategy “while adopting a more conservative risk model that limits leverage exposure”, and that the fund is deploying customised “flex options” on AMD, Intel, SK Hynix and SanDisk, alongside CoreWeave. Flex options are exchange-traded contracts whose strike price, expiry and settlement terms can be tailored. Bought outright, the most they can lose is the premium paid.
Why fully paid means no margin call
A leveraged stock position needs collateral topped up whenever prices fall. A bought option does not: the buyer pays the premium once, and the worst case is losing it. Put in numbers, $100 of equity at four times leverage controls $400 of stock, and a 25% fall costs the whole $100. $100 of option premium can lose $100 and no more, however far the shares drop. The trade-off is time, because an option expires and the thesis has to come right before that date.
That is consistent with what the fund told investors earlier. CNN, citing the Wall Street Journal, reported in July that the fund’s remaining positions were not being financed by borrowing, and Stocktwits reported that Aschenbrenner said the fund would keep trading public equities but would stop borrowing capital. Losing JPMorgan’s lending matters less to a fund that no longer wants to borrow.
| Feature | Leveraged stock book, July | Fully paid bought options, September |
|---|---|---|
| Cash up front | Equity, with borrowed money on top | The premium, paid in full |
| Margin calls | Yes, whenever collateral falls | None on a bought option |
| Worst case | A fall of 25% or more erases the equity at four times leverage | Loss limited to the premium |
| Need for lenders | High: depends on financing lines | Low: needs execution and custody |
| Main enemy | The price path and collateral calls | Time decay and expiry |
| Risk to the broker | Credit loss if prices gap through the margin | Mostly operational |
What the JPMorgan Decision Says About Prime Brokerage
One lender leaving one client would be a footnote in a quieter year. This year it lands in a business that has grown fast, in which the biggest banks say they are already turning clients away.
A business that has nearly doubled
IFR reported that Office of Financial Research data show prime brokerage borrowing by hedge funds has nearly doubled over five years to $3.2 trillion. Goldman Sachs generated a record $3.26 billion of equities financing revenue in the second quarter of 2026, which IFR noted was 26% more than it made across the whole of 2020. Financing is the part of the bundle JPMorgan withdrew, and it is the part that earns the money.
Demand the banks are turning away
Goldman’s chief executive, David Solomon, told analysts on 14 July that “there continues to be far more demand across the client segment than we’re willing to engage”, adding that “the demands for the provision of financing are outstripping what we think is the appropriate quantum” in “an AI capex super-cycle”. When the largest lenders are already rationing balance sheet, a client that has become more trouble than its spread is an easy one to drop.
The Archegos benchmark
Every prime broker measures a near miss against Archegos Capital Management, the $36 billion family office whose 2021 collapse caused more than $10 billion of bank losses. IFR noted that Bill Hwang was sentenced to 18 years in prison for fraud and market manipulation, which he is appealing, and that there is no suggestion Situational Awareness broke any law. The comparison that matters for JPMorgan and its peers is narrower: concentrated positions, several banks, and an unwind squeezed into days.
Why the path of prices mattered
One banker told IFR that “the path” of a fall “is important for a lender”. SanDisk slumped 56.5% from its June peak to its July low, but its largest single-day drop was 14%, which IFR said is typically not enough to blow through a bank’s margin cushion. A slow fall lets a lender collect margin every day. “Contrast that with down 55% in a day,” the banker said, “that would be highly systemic.” The same banker called the episode a “sober reminder that this crown jewel business … does come with risk”.
The SEC Inquiry and the Timing Question
The lending decision arrives with a regulatory backdrop that is easy to over-read. Here is what has been reported, and what it does not show.
What the SEC asked
Reuters reported on 24 August that the SEC had sent subpoenas to Wall Street banks working with Situational Awareness, probing the timing of the trades that triggered margin calls and the banks’ communications with the fund about its use of leverage. Goldman Sachs, JPMorgan, Citigroup and Bank of America were named as the fund’s top lenders. The SEC and all four banks declined to comment, and the New York Times reported the development first.
What it does not mean
Reuters added that such an inquiry does not necessarily result in enforcement, and that requests for information alone do not imply any firm is a target. The fund said it was “to be expected that regulators would closely examine any funds that are high profile, produce significant returns, or have particularly dramatic drawdowns”, and that it would “cooperate to the fullest extent with any regulatory request”.
Why the lending decision is not evidence either way
It is tempting to read the JPMorgan exit as a verdict on the inquiry. Nothing reported supports that. Banks end lending relationships for commercial reasons all the time, and both reports tie JPMorgan’s decision to the July losses, not to the regulator. The two events share a timeline and a cast of banks, and nothing more has been established.
The Situational Awareness Timeline Through JPMorgan's Exit
Six weeks separate the Citadel sale from JPMorgan’s exit. The table below puts the reported milestones in order, with the outlet behind each one.
| Date | Event | Reported by |
|---|---|---|
| July 2024 | Fund launches with a reported $225 million from backers including Patrick and John Collison, Nat Friedman and Daniel Gross | CNBC |
| First half of 2026 | Up 439%, and 1,551% since inception, per a July investor letter | IFR |
| Early July 2026 | Assets peak above $45 billion | CNBC |
| 24 July 2026 | Letter calls the sell-off a buying opportunity and invites fresh capital from 1 August | TechCrunch, citing the FT |
| 29 July 2026 | Citadel opens talks to buy holdings | Citadel letter, via CNBC |
| 30 July 2026 | Public book of about $16 billion sold to Citadel at roughly a 10% discount before the open | IFR |
| End of July 2026 | Assets about $10 billion; fund still up about 80% for the year | CNBC; Investing.com |
| 5 August 2026 | All four prime brokers reported ready to keep backing the fund | New York Post |
| 9 August 2026 | $400 million invested in chip start-up Source Foundry, $500 million in total | TechCrunch, citing the WSJ |
| 14 August 2026 | 13F shows $20.24 billion of reportable holdings at 30 June | Stocktwits |
| 21 August 2026 | Griffin says Citadel has shed more than 80% of the risk it bought | CNBC; Business Insider |
| 24 August 2026 | SEC subpoenas to the fund’s banks reported | Reuters |
| 11 September 2026 | Options activity reported, and JPMorgan ends its lending | CNBC; Reuters and the FT |
Where the numbers disagree
Two figures in this timeline come in competing versions. The Wall Street Journal, as cited by CNBC, put gains since inception at more than 1,000%, while IFR quoted a July investor letter putting them at 1,551%. The first is a floor and the second a point figure, so both can hold. The Citadel clean-up is harder to square: CNBC reported “more than 100 block trades”, while Business Insider quoted the letter itself saying “nearly 100 block trades totaling over $4 billion”. The direct quotation is the better guide.
The banks made the Citadel sale possible
Griffin’s letter credited the lenders directly. “A transaction of this magnitude could not have been completed without the extraordinary cooperation of the trading and prime brokerage teams at the banks serving both firms,” he wrote. JPMorgan was one of those banks. Helping a client out of trouble in July and ending the financing in September are not contradictory: the first protects the loan, and the second stops the next one.
What the Anthropic stake does for the lenders
The fund’s largest remaining asset is a stake in Anthropic valued at about $5 billion, according to Bloomberg as cited by TechCrunch, and IFR’s sources said the banks had recourse to it. That makes Anthropic’s listing plans relevant to anyone still lending to the fund, which we tracked in our report on the Anthropic IPO slipping to mid-October. A listed stake is collateral a bank can value every day. A private one is not, which is one more reason a lender would rather step back until the listing happens.
What Businesses Buying AI Should Take From JPMorgan's Move
Most readers do not lend to hedge funds. The episode still carries practical lessons for any organisation that buys compute, memory or AI services from companies whose shares sit in leveraged portfolios.
Your AI suppliers sit inside someone else’s financing
CoreWeave, SK Hynix, SanDisk and Bloom Energy appear on a hedge fund’s options list, and they also supply compute, memory and power to real businesses. When a leveraged holder of their shares is forced to sell, their prices move for reasons that have nothing to do with delivery. CNBC reported in August that the AI trade rebounded after the Citadel sale, which marked a bottom for the sell-off that started in June. It was a financing event, not a demand collapse.
Ask who finances the vendor
The useful supplier question is not whether a vendor is profitable but who funds it, on what terms, and what happens if one of those funders leaves. JPMorgan’s decision shows how quickly a lender can go from “keen to stand behind” a client to ending the relationship. Treat funding concentration in a critical supplier the way you would treat weak cybersecurity: as a risk to price into the contract, with an exit written in. That is routine vendor management work.
Keep price volatility separate from service risk
Do not renegotiate a working contract because a supplier’s share price moved. Watch for the signals that change delivery instead: a delayed funding round, a lender gone, capacity commitments cut. Build that watch list into your AI strategy reviews rather than reacting to headlines. The same question about who funds the build-out runs through the circular financing debate around Nvidia and Anthropic, and the JPMorgan exit is a smaller example of the same dependency.
JPMorgan and Situational Awareness: Frequently Asked Questions
Did JPMorgan stop lending to Situational Awareness?
Yes, according to a source who spoke to Reuters and to the Financial Times’ reporting. JPMorgan notified the fund that it would end its lending relationship after the July losses. JPMorgan declined to comment.
Is Situational Awareness collapsing?
Nothing reported suggests that. Goldman Sachs, Citigroup and Bank of America remain active brokers, the fund has added Clear Street, it still holds about $10 billion including an Anthropic stake, and it is trading options again.
Why did JPMorgan end the relationship?
Neither JPMorgan nor the fund has said. The reports link the decision to the July losses. Leverage of up to four times, concentration in a few AI stocks and a regulatory inquiry involving the fund’s lenders are all part of the public record.
What is a prime broker?
A bank or broker that holds a hedge fund’s assets, clears its trades, lends it shares and lends it money against its positions. The JPMorgan news concerns the lending.
Has anyone been accused of wrongdoing?
No. The SEC has subpoenaed banks for information, and Reuters reported that such requests do not imply that any firm is a target.
What is Clear Street?
A New York brokerage founded in 2018 by Uri Cohen, which Reuters says has recently started working with the fund. No terms have been reported.
How is the fund trading now?
CNBC reported options purchases on AMD, Bloom Energy, CoreWeave, SK Hynix, SanDisk and the Roundhill Memory ETF. The FT account says the fund is using fully paid flex options that cap losses at the premium paid.
References
JPMorgan curbed lending to Situational Awareness after AI losses, source says (Reuters)
JPMorgan cuts off lending to Aschenbrenner’s AI fund after historic losses (Investing.com)
JPMorgan cut off Situational Awareness lending after AI losses (Financial Times)
Leopold Aschenbrenner’s Situational Awareness is active in options market, sources say (CNBC)
How bank prime brokers weathered Situational Awareness storm (IFR)
Macaskill on Markets: Think twice about being a second-choice prime broker (IFR)
Situational Awareness prime brokers poised to keep backing Leopold Aschenbrenner (New York Post)
US SEC subpoenas Wall Street lenders over Situational Awareness meltdown, source says (Reuters)
How Leopold Aschenbrenner built a $45 billion AI hedge fund and lost most of it in days (CNBC)
Embattled hedge fund Situational Awareness invests $400M in chip startup Source Foundry (TechCrunch)
Leopold Aschenbrenner’s Situational Awareness buying options after collapse (Yahoo Finance)
Situational Awareness Hires Clear Street as Prime Broker (Briefs)
Situational Awareness, the hedge fund making headlines, explained (CNN)
More AI coverage: explore Progressive Robot's AI Models, Tools & Releases hub — hands-on reviews, setup guides and benchmarks in one place.