In light of recent developments at OpenAI, whistleblower advocates are highlighting the whistleblower rights afforded to employees of AI technology companies. In particular, advocates point to the ability of individuals to anonymously report corporate fraud under the U.S. Securities and Exchange Commision (SEC) Whistleblower Program.
Between November 17 and November 21, OpenAI dismissed and then reinstated Sam Altman as CEO. In dismissing Altman, the OpenAI Board raised concerns about Altman’s transparency. In a blog post on November 17, OpenAI claimed that Altman “was not consistently candid in his communications with the Board, hindering its ability to exercise its responsibilities” and that “it is paramount that any C.E.O. be honest and transparent with his or her Board.” On November 19, OpenAI further stated that Altman’s “behavior and lack of transparency in his interactions with the Board undermined the Board’s ability to effectively supervise the company in the manner it was mandated to do.”
“The language of the OpenAI Board in acting so swiftly to remove Sam Altman leads me to wonder if this situation was spurred by an internal whistleblower,” said whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto.
“If any insiders have evidence to reasonably believe that the content of the ‘misleading communication’ cited by the Board violated the law, they should file an anonymous report as soon as possible,” continued Kohn, who also serves as Chair of the National Whistleblower Center.
Misleading statements and transparency issues can run afoul of SEC regulations. Under the SEC Whistleblower Program, whistleblower tips that lead to a successful SEC enforcement action may be entitled to an award of 10-30% of the sanctions collected by the government.
“It is important for employees of OpenAI to know that they have the option and incentive to report wrongdoing, even if their company tells them otherwise,” Kohn stated.
On November 14, the SEC announced its enforcement results for the 2023 Fiscal Year. In addition to detailing the agency’s enforcement successes, the SEC’s announcement revealed that the 2023 Fiscal Year was a record year for the agency’s whistleblower program.
During the 2023 Fiscal Year, the SEC Whistleblower Program issued nearly $600 million in whistleblower awards, the most ever in a fiscal year, including a $279 million award, the single largest award in program history. The whistleblower program also received a record 18,000 whistleblower tips over the course of the fiscal year.