As usual, I find Matt Levine's take on this quite fun and informative, unfortunately HN won't let me include it (comment to long) but it begins thusly;
Elon vs. OpenAI
I wrote yesterday about reports that the US Securities and Exchange Commission might be looking into whether OpenAI or its founder and chief executive officer, Sam Altman, might have misled its investors. Late last year, OpenAI’s board briefly fired Altman for not being “consistently candid,” and then reversed course and fired itself instead. So there is some reason to believe that somebody wasn’t candid about something.
I had my doubts that it would rise to the level of securities fraud, though. For one thing, OpenAI is a nonprofit organization, and even its for-profit subsidiary, OpenAI Global LLC, which has raised money from investors, isn’t all that for-profit. I wrote:
At the top of OpenAI’s operating agreement, it warns investors: “It would be wise to view any investment in OpenAI Global, LLC in the spirit of a donation, with the understanding that it may be difficult to know what role money will play in a post-[artificial general intelligence] world.” I still don’t know what Altman was supposedly not candid about, but whatever it was, how material can it possibly have been to investors, given what they signed up for? “Ooh he said it cost $50 million to train this model but it was really $53 million” or whatever, come on, the investors were donating money, they’re not sweating the details.
But that wasn’t quite right, was it? Nonprofits can defraud their donors. Generally that sort of fraud is not about financial results; it is about the nonprofit’s mission, and whether it is using the donors’ money to advance that mission. If I ask you to donate to save the whales, and you give me $100,000 earmarked to save the whales, and I spend it all on luxury vacations for myself, I probably will get in trouble. I suppose if Altman was not candid about OpenAI’s mission, or its pursuit of that mission, that really could have been a kind of fraud on OpenAI’s donors. I mean investors. It could have been donation/securities fraud on the donors/investors.
Elon vs. OpenAI
I wrote yesterday about reports that the US Securities and Exchange Commission might be looking into whether OpenAI or its founder and chief executive officer, Sam Altman, might have misled its investors. Late last year, OpenAI’s board briefly fired Altman for not being “consistently candid,” and then reversed course and fired itself instead. So there is some reason to believe that somebody wasn’t candid about something.
I had my doubts that it would rise to the level of securities fraud, though. For one thing, OpenAI is a nonprofit organization, and even its for-profit subsidiary, OpenAI Global LLC, which has raised money from investors, isn’t all that for-profit. I wrote:
But that wasn’t quite right, was it? Nonprofits can defraud their donors. Generally that sort of fraud is not about financial results; it is about the nonprofit’s mission, and whether it is using the donors’ money to advance that mission. If I ask you to donate to save the whales, and you give me $100,000 earmarked to save the whales, and I spend it all on luxury vacations for myself, I probably will get in trouble. I suppose if Altman was not candid about OpenAI’s mission, or its pursuit of that mission, that really could have been a kind of fraud on OpenAI’s donors. I mean investors. It could have been donation/securities fraud on the donors/investors.