McCuskey, coalition of AGs urge SEC to review OpenAI

By Chris Dickerson | Legal Newsline
The Center Square

West Virginia Attorney General J.B. McCuskey has joined a coalition of 10 states in a letter to the U.S. Securities and Exchange Commission to raise concerns about OpenAI going public and the integrity of public markets.

Led by Montana Attorney General Austin Knudsen, the coalition is asking the Commission to apply especially stringent scrutiny to any filings submitted by OpenAI, seeking to protect the legal rights of state investment funds that provide retirement benefits for public employees. In addition, the states are working to protect citizens from fraud that could impact individual investments.

The states are asking for stricter scrutiny of OpenAI’s filing because of questionable business practices by company founder and CEO Sam Altman.

Altman has “a history of self-dealing and serious conflicts of interest that have created significant risk for the company,” according to the May 12 letter sent to SEC Chairman Paul Atkins. “To protect investors and ensure fair and orderly markets, the Commission must not permit that apparent misconduct to persist if OpenAI goes public.”

McCuskey said the coalition of AGs want to ensure investments are protected from fraud.

“When individuals and states invest in the public market, we need to be vigilant that those monies are being handled in the most credible way possible,” he said. “People work hard, save and invest to provide for their future.

“We want to protect the money invested to finance public employees’ retirement funds. We need to ensure that these investments are protected from fraud.”

In its letter, the coalition of AGs stressed that complete disclosure is essential for investors, including state residents and public pension funds, to make informed decisions regarding OpenAI’s stock.

The AGs ask that OpenAI’s filings fully disclose the complete scope of Altman’s personal investments (whether direct or indirect) in companies that have, or may in the future have, business relationships with OpenAI; all transactions in which Altman sought OpenAI’s participation in financing or commercial arrangements benefiting companies in which he holds a personal financial interest, along with a description of the process by which such transactions were reviewed, approved or rejected by OpenAI’s board; the specific circumstances surrounding Altman’s removal as CEO in November 2023, including the board’s specific findings regarding his candor and his failure to disclose outside investments, and the steps taken since to remedy those deficiencies; and the governance mechanisms that have been or will be put in place to manage and disclose Altman’s conflicts of interest on an ongoing basis following the IPO.

In addition to Montana and West Virginia, the other states joining the letter are Alabama, Arkansas, Florida, Idaho, Iowa, Louisiana, Nebraska and Oklahoma.