Cloud9 hit with $175k fine by Riot

Riot Games has punished Esports organization Cloud9 for breaching the company’s competitive League of Legends rules on employee stock plans.

The infringement was the result of Cloud9’s seven-player equity infringement of rules laid down by the League in November 2017 which prohibits team owners of Ligue Championship Series (LCS) from “acting as players” and players from “owning a portion of the team for which they played.”

On June 24, Cloud9 sent 10 papers to the League e-mail containing contract updates, summarization sheets and items known as a restricted stock unit (RSUs) grants to a number of players. In mid-August, the RSUs had been flagged by an internal investigation that was “prioritized” in October after Cloud9 came back from the European World Championship.

The investigation concluded that players receiving RSU were categorized into two categories: “those who accepted RSUs instead of salaries and those who received RSUs.” The LCS reported that there is a “generalized assumption that the RSUs are allowed by the players and their members, as they do not believe that if they are against the law they will be given equities.”

The LCS argues that Cloud9 “boiled down to the idea that one hand didn’t know what the other hand was doing.” The research shows that Cloud9 will receive a $25,000 fine per player, for a $175,000 fine.

In contrast, it is aimed at’ paying other sums on the Cloud9 roster of players that are no longer available in a cumulative amount of money to make up for the fair market value of those games’ and’ canceling existing RSU subsidies and/or removing RSU subsidies by renegotiating their present deals’ with current team players.