SEC is Inquiring OpenAI For the Fire-Hire Brouhaha

The Securities and Exchange Commission (SEC) has launched an inquiry into AI startup OpenAI soon after the company’s board of directors unexpectedly removed Sam Altman, its chief executive, at the end of last year, as per the Wall Street Journal’s sources. 

The probe, previously unreported, has been seeking internal documentations from current and former OpenAI officials and directors, and had sent a subpoena to the company in December. 

At the time, directors gave “consistently candid in his communications,” as the reason to oust Altman but didn’t elaborate. The action by SEC has been set up to examine internal communications of Altman, as part of an investigation into whether the company’s investors were misled.

Privately, the board worried that the company’s chief was not sharing all of his plans to raise money from investors in the Middle East for an AI chip project, people with knowledge of the situation have said. Later reports confirmed that Altman, 38, is seeking to raise $7 trillion for the semiconductor project. 

Even though OpenAI tried to skip Altman’s dismissal, who was soon rehired, the controversy continues to haunt the company. In addition to the SEC, the San Francisco based company has hired WilmerHale law firm to conduct its own investigation into Altman’s behavior and the board’s decision to remove him which is expected to close soon. 

The company currently valued at $80 billion has faced industry’s push toward generative AI as their CEO proudly and constantly promoted the technology — while acknowledging the dangers. 

OpenAI is also being scrutinised by the Federal Trade Commission (FTC) as a part of the inquiry looking into investments and partnerships of leading generative AI companies and their cloud providers. The compulsory orders have been sent to Alphabet (Google’s parent company), Amazon, Anthropic, Microsoft, and OpenAI.