(Against All Defendants For Violations of  Section 10(b) And Rule 10b-5 Promulgated Thereunder)   (Violations of Section 20(a) of the  Exchange Act Against The Individual Defendants)   1. Cash Position: Cash and liabilities at December 31, 2014 of approximately $14.8  million and $4.5 million, respectively. (Subsequently, in March 2015, the Company  closed a private placement transaction for total gross proceeds of approximately  $20,000,000).   17.  The Company focuses on monetizing the rapidly growing health care market in China by  marketing and commercializing stem cell and immune cell therapeutics, related tools and products from  CBMG patent-protected homegrown cell technology developed by the Company’s research and  development team, as well as by utilizing exclusively in-licensed intellectual properties.   18.  The purported treatment focal points are cancer, neurodegenerative and other  degenerative diseases comprised of Knee Osteoarthritis ("KOA"), Spinal Muscular Atrophy ("SMA"),  Amyotrophic Lateral Sclerosis ("ALS"), and Stroke.   19.  Under the direction of the Company and the Individual Defendants, paid stock promoters  touted the Company’s stock over the internet and other fora during the Class Period.     2. Net Cash Used in Operating Activities: Q4 and full-year 2014 net cash used in  operating activities of $2.2 million and $10.3 million, respectively, compared to $1.3  million and $8.5 million for the same periods in 2013.  Case3:15-cv-01795   Document1   Filed04/21/15   Page10 of 23 11  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24   20.  The purpose of the promotional campaign was to raise additional capital, artificially  increase shareholder value, and raise the Company’s profile in the capital markets. This promotional  campaign included dozens of published articles and/or news reports.  The Company never disclosed this  promotional campaign in its public filings.   Securities Laws On Stock Promotion   21.  Section 17(b) of the Securities Act of 1933 [15 U.S.C. 77q(b)] is commonly known as  the “anti-touting” provision. It prohibits publicizing information about a security without “fully  disclosing” any consideration received or to be received, directly or indirectly, from the issuer, and the  Case3:15-cv-01795   Document1   Filed04/21/15   Page5 of 23 6  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  amount thereof. Id.  Moreover, an of issuer securities is also required to disclose the details of its  relationship with a stock promoter in its regulatory filings.    Materially False and Misleading Statements  Issued During the Period   22.  On June 18, 2014, the first day of the Class Period, the Company commenced trading on  the NASDAQ exchange.  On June 18, 2014, the Company issued a press release, stating, in part:  Cellular Biomedicine Group Inc. (NASDAQ: CBMG) (the “Company”), a biomedicine  firm engaged in the development of new treatments for degenerative and cancerous  diseases, announced today that its common stock commences trading on NASDAQ under  the ticker symbol “CBMG” effective today, June 18, 2014.  “We are extremely proud to be an early pure-play biotechnology company from China to  be approved for listing on The NASDAQ Capital Market and are gratified to have  reached this significant milestone in the Company’s history. We believe this achievement  will provide greater visibility for our stock and that this accomplishment demonstrates to  our shareholders our commitment to building shareholder value while improving the  quality of life for countless patients,” stated Dr. Wei (William) Cao, Chief Executive  Officer of Cellular Biomedicine Group.  Mr. Bizuo (Tony) Liu, Chief Financial Officer of Cellular Biomedicine Group,  commented, “Following a comprehensive evaluation of all U.S. exchanges, we  determined that The NASDAQ Capital Market was the best fit for Cellular Biomedicine  Group. CBMG has met and will remain subject to all the NASDAQ listing  requirements.”   23.  On August 14, 2014, the Company issued a press release announcing second quarter and  first half 2014 financial results and provided business highlights.  The press release stated, in part:  PALO ALTO, Calif., Aug. 14, 2014 (GLOBE NEWSWIRE) — Cellular Biomedicine  Group Inc. (Nasdaq:CBMG) (the “Company”), a biomedicine firm engaged in the  development of new treatments for degenerative and cancerous diseases, today reported  financial results for the three and six months ended June 30, 2014 and provided business  highlights including the six-month data from its Phase I/IIa clinical trial for  ReJoinTM treatment for Knee Osteoarthritis (KOA).  Dr. William (Wei) Cao, Chief Executive Officer of Cellular Biomedicine Group,  commented, “We are very excited about the progress we have made so far this year with  our lead product candidate ReJoinTM for Knee Osteoarthritis, especially with the Phase  IIa six-month follow-up MRI data. The IIa twelve-month follow-up MRI test has been  completed and final analysis will be available in the third quarter of this year.  All  patients in the Phase IIb trial completed treatment in July.   We grew our Intellectual  Case3:15-cv-01795   Document1   Filed04/21/15   Page6 of 23 7  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  Property portfolio to 41 patents in various stages of approval in China, U.S. and PCT,  including 12 granted China patents. We are excited about our recent announcement to  add new potential reduced time-to-commercialization TCR cancer immunotherapy to our  technology platform.”  Financial Results  Cellular Biomedicine Group reported a net loss for the three and six months ended June  30, 2014 of $6.7 million, or $0.85 loss per share and $7.1 million, or $0.93 loss per share,  respectively, compared to a net loss of $2.5 million, or $0.44 loss per share, and $7.9  million, or $1.52 loss per share, for the same periods a year ago. The increase in net loss  of $4.2 million for the three months ended June 30, 2014 compared to the same period in  2013 is related to one-time costs incurred, including impairment of goodwill and  employee severance, for the discontinuation of the Consulting segment.  The decrease in  net loss of $0.8 million for the six months ended June 30, 2014 compared to the same  period in 2013 is due to one-time merger expenses incurred in 2013, partially offset by  the costs of discontinuing the Consulting segment.  General and administrative expenses for the three months ended June 30, 2014 increased  $0.1 million compared to the same period in 2013.  The six months ended June 30, 2014  decreased $2.7 million as compared to the same period in 2013, mainly from the costs  related to merger activities incurred in 2013.  Research and development expense, depreciation and amortization expense remained  relatively unchanged for the three and six months ended June 30, 2014 and 2013. Other  income changed minimally as compared to prior periods for rent subsidy.  As of June 30, 2014, the Company had $13.6 million in cash and cash equivalents. For  the six months ended June 30, 2014, cash used for operations was $4.7 million compared  to $4.6 million for the same period in 2013.   24.  That same day, the Company filed its quarterly report on Form 10-Q with the SEC  reiterating the previously announced financial results, which was signed by defendants Cao and Liu.  In  addition, the Form 10-Q contained certifications signed pursuant to the Sarbanes-Oxley Act of 2002  (“SOX”) by defendants Cao and Liu, stating that the financial information contained in the Form 10-Q  was accurate, and disclosed any material changes to the Company’s internal control over financial  reporting.   25.  On November 19, 2014, the Company issued a press release announcing third quarter  2014 financial results and providing business highlights.  The press release stated, in part:  Case3:15-cv-01795   Document1   Filed04/21/15   Page7 of 23 8  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  PALO ALTO, Calif., Nov. 19, 2014 (GLOBE NEWSWIRE) — Cellular Biomedicine  Group Inc. (Nasdaq:CBMG) (the “Company”), a biomedicine firm engaged in the  development of effective treatments for degenerative and cancerous diseases, today  reported financial results and provided business highlights for the third quarter ended  September 30, 2014.  Dr. William (Wei) Cao, Chief Executive Officer of Cellular Biomedicine Group,  commented, “In the third quarter we continued to execute our focus of acquiring  advanced technologies and talents that position CBMG as a leader in both stem cell and  cancer immune cell technologies in China. With completion of the acquisition of Agreen  Biotech Co. Ltd. China (“AG”), we added a distinguished cancer immune cell therapy  platform that we expect would provide consistent technical service revenue stream and  pipeline to our technology platform.We grew our Intellectual Property portfolio to 45  patents in various stages of approval in China, U.S. and through the Patent Cooperation  Treaty (PCT), including one granted US Patent and 13 granted China patents.  Our lead  regenerative medicine product candidate ReJoinTM for Knee Osteoarthritis (KOA)  continues to make excellent progress. We look forward to announcing the KOA Phase  I/IIa clinical trial twelve-month follow-up results at the World Stem Cell Summit in San  Antonio, Texas on December 5th, and we expect to announce the interim data from the  Phase IIb trial in the next few months.”  Financial Results  Cellular Biomedicine Group reported a net loss for the three months ended September 30,  2014 of approximately $2.8 million, or $0.31 loss per share, compared to a net gain of  approximately $0.6 million, or $0.09 gain per share for the same period a year ago. The  increase in net loss of approximately $3.4 million is related to the discontinuation of the  consulting business in Q2 2014, which contributed a net profit of approximately $2.3  million for the three months ended September 2013.  General and administrative expenses for the three months ended September 30, 2014  increased approximately $0.6 million compared to the same period in 2013, which mainly  resulted from payroll increase of approximately $0.4 million and travel expense increase  of approximately $0.2 million.  For the three months ended September 30, 2014, research and development expense  increased by approximately $0.5 million compared with same period last year, which  mainly resulted from the increase in experiment fees of approximately $0.5 million.  Other income changed minimally mainly due to the fluctuation of foreign currency gains  and losses.  As of September 30, 2014, the Company had approximately $9.8 million in cash and cash  equivalents.   26.  On November 19, 2014, the Company filed its quarterly report on Form 10-Q with the  SEC reiterating the previously announced financial results, which was signed by defendants Cao and  Case3:15-cv-01795   Document1   Filed04/21/15   Page8 of 23 9  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  Liu.  In addition, the Form 10-Q contained certifications signed pursuant to the Sarbanes-Oxley Act of  2002 (“SOX”) by defendants Cao and Liu, stating that the financial information contained in the Form  10-Q was accurate, and disclosed any material changes to the Company’s internal control over financial  reporting.   27.  Moreover, the Form 10-Q contained the following disclosure regarding stock promoters:  Stockholders should be aware that, according to SEC Release No. 34-29093, the market  for penny stocks has suffered in recent years from patterns of fraud and abuse. Such  patterns include (1) control of the market for the security by one or a few broker-dealers  that are often related to the promoter or issuer; (2) manipulation of prices through  prearranged matching of purchases and sales and false and misleading press releases; (3)  boiler room practices involving high-pressure sales tactics and unrealistic price  projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask  differential and markups by selling broker-dealers; and (5) the wholesale dumping of the  same securities by promoters and broker-dealers after prices have been manipulated to a  desired level, along with the resulting inevitable collapse of those prices and with  consequent investor losses. Our management is aware of the abuses that have occurred  historically in the penny stock market. Although we do not expect to be in a position to  dictate the behavior of the market or of broker-dealers who participate in the market,  management will strive within the confines of practical limitations to prevent the  described patterns from being established with respect to our securities. However, the  occurrence of these patterns or practices could increase the volatility of our share price.   28.  On February 2, 2015, “LifeTech Capital”, a purported research-focused biotechnology  and medical technology investment bank, raised their target price to $32.50 on CBMG with a Strong  Speculative Buy rating.  The 26-page report, authored by Stephen M. Dunn, Senior Managing Director  of Research at LifeTech Capital, discusses CBMG’s latest acquisitions and new market valuation. In  the report Mr. Dunn states, “With 4 human clinical and 2 preclinical programs in immuno-oncology,  CBMG is now the leader in China for this promising cancer technology. We expect CBMG to continue  their aggressive acquisition strategy for immuno-oncology drugs in China as well as sign development  partnerships with western pharma companies for the Chinese market.”   29.  On March 31, 2015, the Company issued a press release announcing full-year and fourth  quarter 2014 financial results. The press release stated, in part:  Case3:15-cv-01795   Document1   Filed04/21/15   Page9 of 23 10  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  SHANGHAI, China and PALO ALTO, Calif., March 31, 2015 /GlobeNewswire/ —  Cellular Biomedicine Group Inc. (NASDAQ: CBMG) (“CBMG” or the “Company”), a  biomedicine firm engaged in the development of effective treatments for degenerative  and cancerous diseases, today reported full-year and fourth quarter 2014 financial results  for the period ended December 31, 2014.  “2014 laid the foundation for building a world-class biotechnology enterprise that was  marked by achieving notable corporate and clinical milestones and meaningful  acquisitions that will drive our business momentum as we move into 2015,” said William  (Wei) Cao, PhD, BM, Chief Executive Officer of Cellular Biomedicine Group. “In  addition to our successful listing on NASDAQ, we accelerated the growth of our  Immuno-Oncology platform through the acquisition of Agreen Biotech Co. Ltd. China  (“AG”), the acquisition of third generation Chimeric Antigen Receptor T cell (CAR-T),  anti-PD-1, CD19 and aAPC cancer immunotherapy technologies from Persongen  Biotechnology Ltd., and the acquisition of four CAR-T therapies with corresponding  Phase I clinical data and manufacturing knowledge from Chinese PLA General Hospital  (“PLAGH”, Beijing, also known as “301 Hospital”). The Company’s lead product  candidate from our Human Adipose-Derived Mesenchymal Progenitor Cell (haMPC)  Platform, ReJoinTM for the treatment of Knee Osteoarthritis (KOA), reported positive 12  month results from its Phase IIa clinical trials in 2014 and we are encouraged by the  interim Phase IIb clinical data released in the first quarter of 2015 which continues to  show excellent progress. We look forward to 2015 as we continue to amalgamate novel  cancer technology leaders, deliver promise from our clinical trials to serve several large  unmet medical needs in China and seek to evolve into a leader in the biotechnology  field.”  Tony (Bizuo) Liu, Chief Financial Officer of the Company, commented, “I am pleased to  also announce the successful completion of an $18 million private placement transaction  in 2014 and $20 million in 2015 which fortified our cash position. We will continue to  leverage our financial resources to expand our technology portfolio, strengthen our  clinical pipeline, pursue strategic acquisitions, add world-class scientific talent and  evaluate multi-national licensing opportunities. We believe these strategic initiatives will  further validate our vision of becoming an innovative cell-therapy company that delivers  value to our shareholders.”  Fourth Quarter and 2014 Financial Performance   3. Revenue: Q4 and full-year 2014 revenue of $0.4 million and $0.6 million, respectively,  compared to $0.1 million and $0.2 million for the same periods in 2013.   30.  On March 31, 2015, the Company filed its annual report on Form 10-K with the SEC  reiterating the previously announced financial results, which was signed by defendants Cao and Liu.  In  addition, the Form 10-K contained certifications signed pursuant to the Sarbanes-Oxley Act of 2002  (“SOX”) by defendants Cao and Liu, stating that the financial information contained in the Form 10-K  was accurate, and disclosed any material changes to the Company’s internal control over financial  reporting.   31.  Moreover, the Form 10-K stated the following regarding stock promotion:  Stockholders should be aware that, according to SEC Release No. 34-29093, the market  for penny stocks has suffered in recent years from patterns of fraud and abuse. Such  patterns include (1) control of the market for the security by one or a few broker-dealers  that are often related to the promoter or issuer; (2) manipulation of prices through  prearranged matching of purchases and sales and false and misleading press releases; (3)  boiler room practices involving high-pressure sales tactics and unrealistic price  projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask  differential and markups by selling broker-dealers; and (5) the wholesale dumping of the  same securities by promoters and broker-dealers after prices have been manipulated to a  desired level, along with the resulting inevitable collapse of those prices and with  consequent investor losses. Our management is aware of the abuses that have occurred  Case3:15-cv-01795   Document1   Filed04/21/15   Page11 of 23 12  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  historically in the penny stock market. Although we do not expect to be in a position to  dictate the behavior of the market or of broker-dealers who participate in the market,  management will strive within the confines of practical limitations to prevent the  described patterns from being established with respect to our securities. However, the  occurrence of these patterns or practices could increase the volatility of our share price   32.  The statements in ¶¶ 22-31 above were materially false and/or misleading because they  misrepresented and/or failed to disclose that: (i) the Company achieved an unsustainable $500m  valuation by using paid stock promoters; (ii) its "Car-T" technology has experienced patient deaths and  had no meaningful market value; (iii) its founders have been the target of multiple allegations of  dishonesty; and (iv) as a result of the above, the Company’s financial statements were materially false  and misleading at all relevant times.  36.  Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure  23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased or otherwise acquired  CBMG securities during the Class Period (the “Class”); and were damaged upon the revelation of the  alleged corrective disclosures.  Excluded from the Class are defendants herein, the officers and  directors of the Company, at all relevant times, members of their immediate families and their legal  representatives, heirs, successors or assigns and any entity in which defendants have or had a  controlling interest.   37.  The members of the Class are so numerous that joinder of all members is impracticable.   Throughout the Class Period, CBMG securities were actively traded on the NASDAQ.  While the exact  number of Class members is unknown to Plaintiff at this time and can be ascertained only through  appropriate discovery, Plaintiff believes that there are hundreds or thousands of members in the  proposed Class.  Record owners and other members of the Class may be identified from records  maintained by CBMG or its transfer agent and may be notified of the pendency of this action by mail,  using the form of notice similar to that customarily used in securities class actions.   38.  Plaintiff’s claims are typical of the claims of the members of the Class as all members of  the Class are similarly affected by defendants’ wrongful conduct in violation of federal law that is  complained of herein.   39.  Plaintiff will fairly and adequately protect the interests of the members of the Class and  has retained counsel competent and experienced in class and securities litigation.  Plaintiff has no  interests antagonistic to or in conflict with those of the Class.  Case3:15-cv-01795   Document1   Filed04/21/15   Page13 of 23 14  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24   4. G&A Expenses: Q4 and full-year 2014 general and administrative expenses of $3.3  million and $8.4 million, respectively, compared to $2.2 million and $9.3 million for the  same periods in 2013. Excluding the stock-based compensation of $1.9 million and $1.5  million recorded in G&A expenses for full-year 2014 and 2013, the G&A expenses  would have been $6.5 million and $7.8 respectively.   40.  Common questions of law and fact exist as to all members of the Class and predominate  over any questions solely affecting individual members of the Class.  Among the questions of law and  fact common to the Class are:      whether the federal securities laws were violated by defendants’ acts as alleged herein;    whether statements made by defendants to the investing public during the Class Period  misrepresented material facts about the business, operations and management of  45.  Plaintiff repeats and realleges each and every allegation contained above as if fully set  forth herein.   46.  This Count is asserted against defendants and is based upon Section 10(b) of the  Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder by the SEC.   47.  During the Class Period, defendants engaged in a plan, scheme, conspiracy and course of  conduct, pursuant to which they knowingly or recklessly engaged in acts, transactions, practices and  courses of business which operated as a fraud and deceit upon Plaintiff and the other members of the  Class; made various untrue statements of material facts and omitted to state material facts necessary in  order to make the statements made, in light of the circumstances under which they were made, not  misleading; and employed devices, schemes and artifices to defraud in connection with the purchase  Case3:15-cv-01795   Document1   Filed04/21/15   Page15 of 23 16  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  and sale of securities.  Such scheme was intended to, and, throughout the Class Period, did:  (i) deceive  the investing public, including Plaintiff and other Class members, as alleged herein; (ii) artificially  inflate and maintain the market price of CBMG securities; and (iii) cause Plaintiff and other members  of the Class to purchase or otherwise acquire CBMG securities and options at artificially inflated prices.   In furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them, took  the actions set forth herein.   48.  Pursuant to the above plan, scheme, conspiracy and course of conduct, each of the  defendants participated directly or indirectly in the preparation and/or issuance of the quarterly and  annual reports, SEC filings, press releases and other statements and documents described above,  including statements made to securities analysts and the media that were designed to influence the  market for CBMG securities.  Such reports, filings, releases and statements were materially false and  misleading in that they failed to disclose material adverse information and misrepresented the truth  about CBMG’s finances and business prospects.   49.    By virtue of their positions at CBMG, defendants had actual knowledge of the  materially false and misleading statements and material omissions alleged herein and intended thereby  to deceive Plaintiff and the other members of the Class, or, in the alternative, defendants acted with  reckless disregard for the truth in that they failed or refused to ascertain and disclose such facts as  would reveal the materially false and misleading nature of the statements made, although such facts  were readily available to defendants.  Said acts and omissions of defendants were committed willfully  or with reckless disregard for the truth.  In addition, each defendant knew or recklessly disregarded that  material facts were being misrepresented or omitted as described above.   5. R&D Expenses: Q4 and full-year 2014 research and development expenses of $0.8  million and $2.7 million, respectively, compared to $0.6 million and $1.9 million for the  same periods a year ago, the increase mainly attributable to significant activities  surrounding the development of our biomedicine intellectual property, including the  implementation of Phase IIb clinical trials for KOA and launch of the clinical trial for  cartilage damage.   50.  Defendants were personally motivated to make false statements and omit material  information necessary to make the statements not misleading in order to personally benefit from the  sale of CBMG securities from their personal portfolios.  Case3:15-cv-01795   Document1   Filed04/21/15   Page16 of 23 17  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24   51.  Information showing that defendants acted knowingly or with reckless disregard for the  truth is peculiarly within defendants’ knowledge and control.  As the senior managers and/or directors  of CBMG, the Individual Defendants had knowledge of the details of CBMG’s internal affairs.   52.  The Individual Defendants are liable both directly and indirectly for the wrongs  complained of herein.  Because of their positions of control and authority, the Individual Defendants  were able to and did, directly or indirectly, control the content of the statements of CBMG.  As officers  and/or directors of a publicly-held company, the Individual Defendants had a duty to disseminate  timely, accurate, and truthful information with respect to CBMG’s businesses, operations, future  financial condition and future prospects.  As a result of the dissemination of the aforementioned false  and misleading reports, releases and public statements, the market price of CBMG securities was  artificially inflated throughout the Class Period.  In ignorance of the adverse facts concerning CBMG’s  business and financial condition which were concealed by defendants, Plaintiff and the other members  of the Class purchased or otherwise acquired CBMG securities at artificially inflated prices and relied  upon the price of the securities, the integrity of the market for the securities and/or upon statements  disseminated by defendants, and were damaged thereby.   53.  During the Class Period, CBMG securities were traded on an active and efficient market.   Plaintiff and the other members of the Class, relying on the materially false and misleading statements  described herein, which the defendants made, issued or caused to be disseminated, or relying upon the  integrity of the market, purchased or otherwise acquired shares of CBMG securities at prices artificially  inflated by defendants’ wrongful conduct.  Had Plaintiff and the other members of the Class known the  truth, they would not have purchased or otherwise acquired said securities, or would not have purchased  or otherwise acquired them at the inflated prices that were paid.  At the time of the purchases and/or  acquisitions by Plaintiff and the Class, the true value of CBMG securities was substantially lower than  the prices paid by Plaintiff and the other members of the Class.  The market price of CBMG securities  Case3:15-cv-01795   Document1   Filed04/21/15   Page17 of 23 18  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  declined sharply upon public disclosure of the facts alleged herein to the injury of Plaintiff and Class  members.   54.  By reason of the conduct alleged herein, defendants knowingly or recklessly, directly or  indirectly, have violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder.   55.  As a direct and proximate result of defendants’ wrongful conduct, Plaintiff and the other  members of the Class suffered damages in connection with their respective purchases, acquisitions and  sales of the Company’s securities during the Class Period, upon the disclosure that the Company had  been disseminating misrepresented financial statements to the investing public.  56.  Plaintiff repeats and realleges each and every allegation contained in the foregoing  paragraphs as if fully set forth herein.   57.  During the Class Period, the Individual Defendants participated in the operation and  management of CBMG, and conducted and participated, directly and indirectly, in the conduct of  CBMG’s business affairs.  Because of their senior positions, they knew the adverse non-public  information about CBMG’s false financial statements.    58.  As officers and/or directors of a publicly owned company, the Individual Defendants had  a duty to disseminate accurate and truthful information with respect to CBMG’s financial condition and  results of operations, and to correct promptly any public statements issued by CBMG which had  become materially false or misleading.   59.  Because of their positions of control and authority as senior officers, the Individual  Defendants were able to, and did, control the contents of the various reports, press releases and public  filings which CBMG disseminated in the marketplace during the Class Period concerning CBMG’s  Case3:15-cv-01795   Document1   Filed04/21/15   Page18 of 23 19  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  results of operations.  Throughout the Class Period, the Individual Defendants exercised their power  and authority to cause CBMG to engage in the wrongful acts complained of herein. The Individual  Defendants therefore, were “controlling persons” of CBMG within the meaning of Section 20(a) of the  Exchange Act.  In this capacity, they participated in the unlawful conduct alleged which artificially  inflated the market price of CBMG securities.   6. Net Loss: Q4 and full-year 2014 net loss allocable to common stock holders was $5.5  million and $15.5 million, respectively, compared to $6.5 million and $13.8 million for  the same periods in 2013. Excluding the stock-based compensation of $1.9 million and  $1.5 million recorded for full-year 2014 and 2013, the net loss would have been $13.6  million and $12.3 million respectively.   60.  Each of the Individual Defendants, therefore, acted as a controlling person of CBMG.   By reason of their senior management positions and/or being directors of CBMG, each of the Individual  Defendants had the power to direct the actions of, and exercised the same to cause, CBMG to engage in  the unlawful acts and conduct complained of herein.  Each of the Individual Defendants exercised  control over the general operations of CBMG and possessed the power to control the specific activities  which comprise the primary violations about which Plaintiff and the other members of the Class  complain.   61.  By reason of the above conduct, the Individual Defendants are liable pursuant to Section  20(a) of the Exchange Act for the violations committed by CBMG.  Background  