Cloud9 fined $175,000 by Riot Games for violating player equity rule
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Riot Games has announced that it is fining the LCS team Cloud9 $175,000 after the organization issued stock to seven of its players which is in direct violation of league rules.
Over the course of the past 16 months, Cloud9 has issued equity to seven of its players in the form of gifts and in exchange for lower salaries. This goes against the league rule which states that no player should own equity in a team. Cloud9 was fined $25,000 for each player, which amounted to the $175,000 total.
Cloud9 top laner Eric "Licorice" Ritchie, AD carry Zachary "Sneaky" Scuderi, junglers Dennis "Svenskeren" Johnsen and Robert "Blaber" Huang, with support Tristan "Zeyzal" Stidam were all reportedly granted stock. According to ESPN sources, Former players Nicolai "Jensen" Jensen and Andy "Smoothie" Ta, were also given restricted stock during their time at Cloud9.
Cloud9 also failed to notify Riot of contract amendments and extensions That occurred mid-season, which is yet another violation. In an internal investigation report prepared by Riot, only two of the seven players had an attorney or agent present when the amendments to their contracts were negotiated. Apart from the fine, Cloud9 will also have to pay the players for their restricted stock units or renegotiate their contracts at a higher rate. Riot estimates that this could cost Cloud9 $330,000 to $605,000.
Riot called for a full contract audit for all 10 teams in the summer after rumors emerged that some teams were amending player contracts without notifying the league. Cloud9 filed their documents in June but Riot failed to notice the restricted stock clauses until late August. This led to a full investigation that spanned Cloud9's entire time in the LCS.
Riot added a rule in October that would allow players that have served a team for three or more years to own equity. So far, only Sneaky, Team SoloMid's Søren "Bjergsen" Bjerg and Trevor "Stixxay" Hayes qualify. However, Cloud9 granted Sneaky stock before this new ruling was passed.
With the loses Cloud9 has incurred from their league violations, other teams will think twice before offering equity to players before they've clocked three yearsoon the team.