4 ms·

The nonprofit board holds no fiduciary duty to for-profit investors, big or small. In theory, I suppose you could sue the board over undermining the charter but

The nonprofit board holds no fiduciary duty to for-profit investors, big or small. In theory, I suppose you could sue the board over undermining the charter but that seems tricky itself, this case aside.

jacquesm 3y ago
You keep saying that. But only a judge can confirm that that means that they are able to cause harm without consequences. I don't buy that. The charter is not the only thing that governs what a board can and can not do, just like you can't contract out of the law in any other way a non-profit board members does not have automatic and complete immunity from the fall-out of their actions. That would be an interesting device: a full blown corporate armor that exceeds even the degree of insulation an indemnification would offer. It would be the boardroom equivalent of a magic cloak.
- himaraya 3y ago
  Harming investors in order to uphold the nonprofit charter sounds more reasonable than you suggest. Take it from Matt Levine. I don't think investors would win this line of argument. https://www.bloomberg.com/opinion/articles/2023-11-21/openai-is-a-strange-nonprofit https://www.bloomberg.com/opinion/articles/2023-11-21/openai...
  - jacquesm 3y ago
    But there is no proof whatsoever that they did this to uphold the nonprofit charter. And until that proof surfaces I'm going on the assumption that it doesn't exist because if it does exist they would have certainly used it to bolster their case. Note Ilya's statement of regret and that none of the board members have said a word and that the current CEO is nowhere to be seen. That does not look like a group of people that are acting boldly in the defense of their corporate charter to me. It looks like a bunch of weasels that thought they could get away with murdering the chicken while they were unattended for five minutes and they're now all covered with blood and pretending to be innocent.
    - himaraya 3y ago
      I think that argument fares even worse. The board only needs to prove to a judge they believed firing Sam would benefit the charter, and the leaks from their camp have stated as much. The board has deliberately stayed silent to avoid legal exposure, not a surprise.
      - jacquesm 3y ago
        > The board only needs to prove to a judge they believed firing Sam would benefit the charter, and the leaks from their camp have stated as much. Leaks say whatever they want to say and if I found myself in this position - highly unlikely - and I would have leaked something it would have definitely been something to make me look good. Or did you think that if it made them look bad that it would have been leaked as well? In that case I can see your point.
        himaraya 3y ago
        Regardless, unless discovery finds a smoking gun that the board acted in bad faith vis a vis the charter, which nothing public indicates, a judge would likely tell investors to pound sand.
        jacquesm 3y ago
        After many lawsuits I've learned to not pre-empt what I think a judge will think of anything. It's actionable. Whether they will prevail (or whether the counterparty will fold) is up for grabs. Note this key quote by Nadella: "“As a partner, I think it does deserve you to be consulted on the big decisions.”" That's one way to look at what might be grounds for a suit. He could be wrong, but that won't stop them from suing to establish that fact and they have very little to lose.

jacquesm 3y ago

You keep saying that. But only a judge can confirm that that means that they are able to cause harm without consequences. I don't buy that. The charter is not the only thing that governs what a board can and can not do, just like you can't contract out of the law in any other way a non-profit board members does not have automatic and complete immunity from the fall-out of their actions. That would be an interesting device: a full blown corporate armor that exceeds even the degree of insulation an indemnification would offer. It would be the boardroom equivalent of a magic cloak.

himaraya 3y ago
Harming investors in order to uphold the nonprofit charter sounds more reasonable than you suggest. Take it from Matt Levine. I don't think investors would win this line of argument. https://www.bloomberg.com/opinion/articles/2023-11-21/openai-is-a-strange-nonprofit https://www.bloomberg.com/opinion/articles/2023-11-21/openai...
- jacquesm 3y ago
  But there is no proof whatsoever that they did this to uphold the nonprofit charter. And until that proof surfaces I'm going on the assumption that it doesn't exist because if it does exist they would have certainly used it to bolster their case. Note Ilya's statement of regret and that none of the board members have said a word and that the current CEO is nowhere to be seen. That does not look like a group of people that are acting boldly in the defense of their corporate charter to me. It looks like a bunch of weasels that thought they could get away with murdering the chicken while they were unattended for five minutes and they're now all covered with blood and pretending to be innocent.
  - himaraya 3y ago
    I think that argument fares even worse. The board only needs to prove to a judge they believed firing Sam would benefit the charter, and the leaks from their camp have stated as much. The board has deliberately stayed silent to avoid legal exposure, not a surprise.
    - jacquesm 3y ago
      > The board only needs to prove to a judge they believed firing Sam would benefit the charter, and the leaks from their camp have stated as much. Leaks say whatever they want to say and if I found myself in this position - highly unlikely - and I would have leaked something it would have definitely been something to make me look good. Or did you think that if it made them look bad that it would have been leaked as well? In that case I can see your point.
      - himaraya 3y ago
        Regardless, unless discovery finds a smoking gun that the board acted in bad faith vis a vis the charter, which nothing public indicates, a judge would likely tell investors to pound sand.
        jacquesm 3y ago
        After many lawsuits I've learned to not pre-empt what I think a judge will think of anything. It's actionable. Whether they will prevail (or whether the counterparty will fold) is up for grabs. Note this key quote by Nadella: "“As a partner, I think it does deserve you to be consulted on the big decisions.”" That's one way to look at what might be grounds for a suit. He could be wrong, but that won't stop them from suing to establish that fact and they have very little to lose.