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SEC probes OpenAI for board actions

The Securities and Exchange Commission Launches Inquiry into OpenAI

The Securities and Exchange Commission began an inquiry into OpenAI soon after the company’s board of directors unexpectedly removed Sam Altman, its chief executive, at the end of last year, three people familiar with the inquiry said.

The regulator has sent official requests to OpenAI, the developer of the ChatGPT online chatbot, seeking information about the situation. It is unclear whether the S.E.C. is investigating Mr. Altman’s behavior, the board’s decision to oust him or both.

Even as OpenAI has tried to turn the page on the dismissal of Mr. Altman, who was soon reinstated, the controversy continues to hound the company. In addition to the S.E.C. inquiry, the San Francisco artificial intelligence company has hired a law firm to conduct its own investigation into Mr. Altman’s behavior and the board’s decision to remove him.

The board dismissed Mr. Altman on Nov. 17, saying it no longer had confidence in his ability to run OpenAI. It said he had not been “consistently candid in his communications,” though it did not provide specifics. It agreed to reinstate him five days later.

Privately, the board worried that Mr. Altman was not sharing all of his plans to raise money from investors in the Middle East for an A.I. chip project, people with knowledge of the situation have said.

Spokespeople for the S.E.C. and OpenAI and a lawyer for Mr. Altman all declined to comment.

The S.E.C.’s inquiry was reported earlier by The Wall Street Journal.

OpenAI kicked off an industrywide A.I. boom at the end of 2022 when it released ChatGPT. The company is considered a leader in what is called generative A.I., technologies that can generate text, sounds and images from short prompts. A recent funding deal values the start-up at more than $80 billion.

Many believe that generative A.I., which represents a fundamental shift in the way computers behave, could remake the industry as thoroughly as the iPhone or the web browser. Others argue that the technology could cause serious harm, helping to spread online disinformation, replacing jobs with unusual speed and maybe even threatening the future of humanity.

After the release of ChatGPT, Mr. Altman became the face of the industry’s push toward generative A.I. as he endlessly promoted the technology — while acknowledging the dangers.

In an effort to resolve the turmoil surrounding Mr. Altman’s ouster, he and the board agreed to remove two members and add two others: Bret Taylor, who is a former Salesforce executive, and former Treasury Secretary Lawrence H. Summers.

Mr. Altman and the board also agreed that OpenAI would start its own investigation into the matter. That investigation, by the WilmerHale law firm, is expected to close soon.

Implications of the S.E.C. Inquiry

The Securities and Exchange Commission’s inquiry into OpenAI raises questions about the company’s governance and transparency. The sudden removal and reinstatement of CEO Sam Altman, coupled with allegations of lack of candor and undisclosed fundraising plans, have cast a shadow over OpenAI’s operations.

Challenges in the A.I. Industry

The controversy surrounding OpenAI comes at a critical time for the artificial intelligence industry. The development of generative A.I. technologies like ChatGPT has sparked excitement and debate about the potential impact of such advancements. While generative A.I. has the power to revolutionize various sectors, including communication and creativity, concerns about misinformation, job displacement, and ethical implications loom large.

In conclusion, OpenAI’s ongoing investigation and the S.E.C.’s inquiry underscore the complexities and challenges inherent in the rapid advancement of A.I. technologies. As the industry continues to evolve, it is essential for companies like OpenAI to prioritize transparency, accountability, and ethical decision-making to build trust with stakeholders and navigate potential regulatory scrutiny effectively.

Leah Sirama
Leah Sirama
Leah Sirama, a lifelong enthusiast of Artificial Intelligence, has been exploring technology and the digital realm since childhood. Known for his creative thinking, he's dedicated to improving AI experiences for all, making him a respected figure in the field. His passion, curiosity, and creativity drive advancements in the AI world.


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