OpenAI Under Investigation by SEC for Board’s Actions

The Securities and Exchange Commission (S.E.C.) has launched an inquiry into OpenAI following the unexpected removal of Sam Altman, the company’s chief executive, by its board of directors at the end of last year. Three sources familiar with the inquiry revealed that the regulator has sent official requests to OpenAI, the developer of the ChatGPT online chatbot, to gather information about the situation.

It remains unclear whether the S.E.C. is investigating Mr. Altman’s conduct, the board’s decision to dismiss him, or both. Despite OpenAI’s efforts to move past the controversy surrounding Mr. Altman’s removal, the issue continues to haunt the company. In addition to the S.E.C. inquiry, OpenAI has enlisted a law firm to conduct its own investigation into Mr. Altman’s behavior and the board’s decision.

The board ousted Mr. Altman on November 17, citing a lack of confidence in his ability to lead OpenAI and alleging that he had not been consistently transparent in his communications. The board reinstated him five days later, but concerns lingered privately about Mr. Altman’s undisclosed plans to raise funds from investors in the Middle East for an A.I. chip project.

The S.E.C.’s inquiry was first reported by The Wall Street Journal. OpenAI gained widespread attention in late 2022 with the release of ChatGPT, sparking an industry-wide surge in generative A.I. technologies. The company, known for its advancements in generative A.I. that can produce text, sounds, and images from brief prompts, recently secured a funding deal valuing it at over $80 billion.

Generative A.I. has the potential to revolutionize the tech industry, but concerns have been raised about its potential negative impacts, such as spreading disinformation, displacing jobs, and posing existential threats. Mr. Altman, a prominent figure in the push for generative A.I., has been at the forefront of promoting the technology while acknowledging its risks.

To address the fallout from Mr. Altman’s dismissal, OpenAI and the board agreed to remove two members and appoint two new ones, including Bret Taylor, a former Salesforce executive, and former Treasury Secretary Lawrence H. Summers. The company also initiated its own investigation into the matter, conducted by the WilmerHale law firm, which is expected to conclude soon.

Spokespeople for the S.E.C. and OpenAI, as well as Mr. Altman’s lawyer, declined to comment on the ongoing inquiry. The developments at OpenAI underscore the complexities and challenges facing companies at the forefront of cutting-edge technologies like generative A.I. as they navigate regulatory scrutiny and internal governance issues.