Exclusive: OpenAI investors considering suing the board after CEO's abrupt firing -sources
Exclusive: OpenAI investors considering suing the board after CEO's abrupt firing -sources
Some investors in OpenAI, makers of ChatGPT, are exploring legal recourse against the company's board, sources familiar with the matter told Reuters on Monday, after the directors ousted CEO Sam Altman and sparked a potential mass exodus of employees.
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They considered it, consulted a lawyer, and then stopped considering it, because what the board did was stupid (INCREDIBLY stupid) but it wasn't illegal.
From what I know of the US justice system something being illegal doesn't really matter in civil court. It could probably be argued that the board didn't do what was best for the investors, which is what they exist to do. Instead they potentially cost the investors millions of dollars.
It could probably be argued that the board didn’t do what was best for the investors, which is what they exist to do.
Incorrect. OpenAI LLC (the traded company) does not have a board of directors. The board of directors actually belong to the parent company, simply "OpenAI", which is a nonprofit organization -- the only thing that they're beholden to is the OpenAI company charter.
Here's a simplified breakdown:
Board of Directors =[controls]=> OpenAI (non-profit) =[controls]=> OpenAI LLC =[employs]=> OpenAI CEO
OpenAI LLC is obligated to act in the best financial interest of their shareholders, but OpenAI LLC does not actually have control over who sits in the CEO chair. That power goes to the non-profit "OpenAI" parent company -- a company beholden to their board, not shareholders.
Aah! That's more than I knew. Thanks for the lesson! Then it definitely makes sense that they wouldn't have a case.