OpenAI CEO Sam Altman under investigation over business deals ahead of IPO

OpenAI CEO Sam Altman under investigation over business deals ahead of IPO: Report

In a letter sent on Friday, the committee asked OpenAI to provide documents about its business decisions and governance rules.

By CNBCTV18.com

OpenAI CEO Sam Altman is being investigated by Republican lawmakers in the US over his business dealings as the artificial intelligence company prepares for a possible IPO.

A Republican-led House Oversight Committee has been researching Altman’s business dealings after a Wall Street Journal report in April claimed he pushed OpenAI to work with companies in which he personally invested, including nuclear-fusion startup Helion and aerospace company Stoke Space.

Critics say such partnerships could financially benefit Altman through his outside investments. At the same time, several Republican attorneys general have asked the US Securities and Exchange Commission (SEC) to review OpenAI’s business practices before the company launches an IPO.

In a letter sent on Friday, the committee asked OpenAI to provide documents about its business decisions and governance rules. Lawmakers also requested a briefing from a senior company executive, according to the recent Wall Street Journal report.

Attorneys general from Florida, Montana, Nebraska, Iowa, West Virginia and Louisiana have written to the US Securities and Exchange Commission (SEC), asking it to closely examine OpenAI before its expected IPO.

The committee said it wants to make sure money meant for non-profit or charitable purposes was not used in ways that could financially benefit company executives or board members.

The attorneys general also warned that OpenAI's massive valuation, reportedly around $850 billion in private markets, means the company could quickly become part of major stock indexes and exchange-traded funds (ETFs) after going public.

"The consequences of any self-dealing by Altman could be borne by our state pensions and individual investors, creating enormous financial risk," reads a copy of the letter viewed by the Journal.

The group asked the SEC to carefully review OpenAI’s IPO paperwork, especially the S-1 filing, which companies submit before going public. The document includes details about finances, risks, leadership and possible conflicts of interest. The attorneys general also asked for more information about Altman’s brief removal from OpenAI in 2023.

On Monday, OpenAI board chairman Bret Taylor defended Altman during a court hearing, saying Altman had openly shared details about his investments in other companies and had been transparent about his business ties.

Taylor also said Altman stepped away from internal discussions about a possible deal between OpenAI and Helion because he is personally invested in Helion.

The issue comes at a time when SpaceX CEO Elon Musk accused OpenAI of moving away from its original nonprofit mission and becoming a profit-driven company.

OpenAI has denied this and said Musk knew about and even supported plans to turn the company into a for-profit business. The company also claims Musk wanted full control over OpenAI at one point.