Cloud9 needs to pay a total of $175,000 in fines in addition to removing and repaying stocks that their players hold in the organization.
C9 issued stock to seven of their players, which would’ve been fine prior to 2017 but has been against the rules ever since the league transition to utilizing long-term franchise partners. A new rule was then added, stating members of a team’s full roster aren’t allowed to partake in its ownership.
“Since November 2017 the League has prohibited an owner from serving on his or her team’s Full Time Roster and this effectively makes it a violation of the Official Rules for a player to hold an ownership interest, direct or indirect, in any LCS team for which the player competes,” Riot shared in the LCS Competitive Ruling.
This rule was overlooked by C9, and the organization issued Restricted Stock Units (RSU) to seven of its former and current players. This information wasn’t shared with Riot because of what C9 claims to be an error.
Riot flagged the RSUs late as well, as the developer started working on a new structure that would allow players to partake in ownership in limited and specific situations. With the 2019 Worlds 2019 ending, the investigation kicked off.
With the investigation finalized, Riot decided to fine C9 with $25,000 for each of the players involved, bringing up the fine to $175,000. This is, however, far from all that will need to be paid.
The organization has to negotiate with the players that are currently on the roster to remove and repay their stock options. Restitution options Riot has provided to C9 are expected to cost between $330,000 to $605,000.