SEC investigating whether OpenAI misled investors in Altman saga- WSJ

Investing.com– The Securities and Exchange Commission (SEC) is investigating whether OpenAI investors were misled in the wake of the AI firm’s recent leadership overhaul, the Wall Street Journal reported on Thursday citing people familiar with the matter.

The regulator is specifically looking into internal communications involving CEO Sam Altman, and had also sent a subopena to OpenAI in December, the WSJ report showed.

The move came shortly after Altman’s abrupt ouster and reinstatement in November 2023, which also spurred a massive overhaul of OpenAI’s board of directors.

The overhaul saw the ouster of Ilya Sutskever, who is a co-founder of the AI start-up. 

Major investor Microsoft (NASDAQ:) had taken a non-voting seat, observer post on the board in November but is yet to officially name its candidate for OpenAI’s board. 

Both OpenAI and the SEC did not immediately respond to a request for a comment.

OpenAI shot into the public spotlight with the release of its ChatGPT software in late-2022, which garnered millions of users within days on its ability to generate convincing text responses. The firm triggered a broader rush into generative artificial intelligence (GenAI) over the past year, and is seen as a figurehead in the AI space.

OpenAI had recently unveiled a new model, Sora, which is capable of converting text prompts into videos.

But the AI start-up’s meteoric rise in popularity has also come with its own set of controversies. Its major leadership overhaul in November sparked questions over its governance structure, especially as the firm was founded as a non-profit in 2015.

The firm has also received numerous lawsuits over the nature of the data used in training its GenAI models. Most recently, The New York Times sued OpenAI in December 2023 over allegations that the start-up was illegally using the publication’s copyrighted material.