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After the global success of 2023 and the chaos in governance at the end of the year, a new troubled chapter begins for OpenAi. The Securities and Exchange Commission is reviewing the internal communications of OpenAI CEO Sam Altman as part of an investigation into whether the company’s investors were misled.
The investigation
The regulator, as anticipated by the Wall Street Journal, sought internal documents from current and former OpenAI officials and directors and sent a subpoena to OpenAI. An intervention by the regulator that follows the OpenAI board’s decision in November to fire Altman as CEO and oust him from the board. At the time, the directors said Altman had not been “consistently candid in his communications” without indicating what internal governance issues were significant enough to prompt the board to fire the OpenAi boss.
Then Altman, backed by Microsoft, returned as CEO less than two weeks later, as part of a deal that also included the reconstitution of the board of directors, which he did not join.
The SEC also investigates unlisted companies
The SEC enforces laws that prohibit people from deceiving investors, regardless of whether fund raisers seek capital in public or private markets. The SEC often closes investigations without making formal charges of wrongdoing. OpenAI, recently valued at more than $80 billion, is governed by a nonprofit organization. Investors in its for-profit arm include employees, venture capitalists and Microsoft which has committed $13 billion to the company in exchange for what is essentially a 49% stake in its for-profit division’s profits.