Last week, Christopher Michael Roumayeh, the CEO of esports organization Renegades, who previously was a Financial Industry Regulatory Authority (FINRA) registered broker at investment management firm Merrill Lynch, was fined $15K USD and suspended for 21 months from association with any FINRA member in any capacity, as a result of engaging in unauthorized outside business activities, some of which directly involved the Renegades organization.
According to the FINRA, Roumayeh and an unnamed Merrill Lynch customer (presumably Swedish basketball player Jonas Jerebko who previously played for several NBA teams before joining Russian club BC Khimki in August 2019) purchased the esports organization Renegades (the FINRA does not name the organization) from its founders Christopher “MonteCristo” Mykles and Chris Badawi in August 2016, without providing prior written notice to Merrill Lynch in accordance to FINRA rules. Following the transaction, Roumayeh managed the organization’s day-to-day operations as co-owner and CEO.
Furthermore, in March 2019, Roumayeh participated in a private securities transaction by soliciting an unnamed publicly-traded company, which was not a Merrill Lynch customer (presumably the Beasley Media Group), to invest approximately $5.5M into Renegades. Once again, he failed to notify and receive prior written approval from Merrill Lynch in violation of FINRA rules.
The purpose of FINRA rules, which Roumayeh violated, is to ensure that a financial advisor only offers to sell securities that have been vetted by her or his employer brokerage firm. Moreover, financial advisors have a legal and regulatory obligation to recommend only suitable investments appropriate for their clients’ needs and objectives. At the same time, their employing brokerage firms must supervise the financial advisor’s sales practices and dealings with clients. If any of those obligations are breached, customers might be entitled to a recovery of potential investment losses.
According to its 2019 annual financial earnings report, the Beasley Media Group made a $4.5M investment in Renegades in March 2019. It made a further $0.5M investment in Q3 2019 to acquire a 45% stake in the company, with the carrying amount of the investment being $5.7M at the time, which would align with the information provided about the unnamed publicly-traded company in FINRA’s report. Later that year, in November, the Beasley Media Group acquired the Overwatch League’s Houston Outlaws esports team from Immortals Gaming Club. In January 2020, the company acquired additional shares for $1M in Renegades.
In addition to his FINRA rule violations, Roumayeh became the target of heavy criticism in March of this year, when it was reported that seven out of eight of non-player Renegades employees resigned to protest his behavior and alleged mismanagement of the organization.
Renegades’ former Regional Director Albert Nguyen stated in his resignation statement that “When a leader uses scapegoats and doesn’t accept faults, yells at his people for not bringing results, lies to players and staff, tries to divide staff against each other, says one thing and does another – the organization can not grow. When I talk leadership, I mean at the very top.”
Beasley Media Group provided the following statement to The Esports Observer: “As a responsible company committed to the esports sector, we take this matter very seriously and are currently reviewing the situation.”
Credit: Source link