Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 1 of 18 Page ID #:1
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`Laurence M. Rosen, Esq. (SBN 219683)
`THE ROSEN LAW FIRM, P.A.
`355 South Grand Avenue, Suite 2450
`Los Angeles, CA 90071
`Telephone: (213) 785-2610
`Facsimile: (213) 226-4684
`Email: lrosen@rosenlegal.com
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`Counsel for Plaintiff
`
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`ANDREW TRAMPE, Individually and
`on behalf of all others similarly situated,
`
`
`Case No.
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`CLASS ACTION COMPLAINT FOR
`VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`JURY TRIAL DEMANDED
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`Plaintiff,
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`v.
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`CD PROJEKT S.A., ADAM MICHAL
`KICINSKI, PIOTR MARCIN
`NIELUBOWICZ, and MICHAŁ
`NOWAKOWSKI,
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`Defendants.
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`
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`Plaintiff Andrew Trampe (“Plaintiff”), individually and on behalf of all other
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`persons similarly situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s
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`complaint against Defendants (defined below), alleges the following based upon
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`personal knowledge as to Plaintiff and Plaintiff’s own acts, and information and
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`belief as to all other matters, based upon, inter alia, the investigation conducted by
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`and through his attorneys, which included, among other things, a review of the
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`SECURITIES LAWS
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`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 2 of 18 Page ID #:2
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`Defendants’ public documents, conference calls and announcements made by
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`Defendants, public filings, wire and press releases published by and regarding CD
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`Projekt S.A. (“CD Projekt” or the “Company”), and information readily obtainable
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`on the Internet. Plaintiff believes that substantial evidentiary support will exist for
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`the allegations set forth herein after a reasonable opportunity for discovery.
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`NATURE OF THE ACTION
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`1.
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`This is a class action on behalf of persons or entities who purchased or
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`otherwise acquired publicly traded CD Projekt securities between January 16, 2020
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`and December 17, 2020, inclusive (the “Class Period”). Plaintiff seeks to recover
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`compensable damages caused by Defendants’ violations of the federal securities
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`laws under the Securities Exchange Act of 1934 (the “Exchange Act.
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`JURISDICTION AND VENUE
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`2.
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`The claims asserted herein arise under and pursuant to §§10(b) and
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`20(a) of the Exchange Act (15 U.S.C. §§78j(b) and §78t(a)) and Rule 10b-5
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`promulgated thereunder by the SEC (17 C.F.R. §240.10b-5).
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`3.
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`This Court has jurisdiction over the subject matter of this action under
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`28 U.S.C. §1331 and §27 of the Exchange Act.
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`4.
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`Venue is proper in this judicial district pursuant to §27 of the Exchange
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`Act (15 U.S.C. §78aa) and 28 U.S.C. §1391(b) as the alleged misstatements entered
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`and the subsequent damages took place in this judicial district.
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`5.
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`In connection with the acts, conduct and other wrongs alleged in this
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`Complaint, Defendants (defined below), directly or indirectly, used the means and
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`instrumentalities of interstate commerce, including but not limited to, the United
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`States mail, interstate telephone communications and the facilities of the national
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`securities exchange.
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`– 2 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`

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`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 3 of 18 Page ID #:3
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`PARTIES
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`6.
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`Plaintiff, as set forth in the accompanying Certification, purchased the
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`Company’s securities at artificially inflated prices during the Class Period and was
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`damaged upon the revelation of the alleged corrective disclosure.
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`7.
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`Defendant CD Projekt, through its subsidiaries, engages in the
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`development and digital distribution of videogames worldwide. It operates through
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`two segments, CD PROJEKT RED and GOG.com. The Company's product portfolio
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`includes The Witcher; The Witcher 2: Assassins of Kings; The Witcher 3: Wild
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`Hunt, Hearts of Stone games, and Blood and Wine; Thronebreaker: The Witcher
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`Tales; Gwent: The Witcher Card game; and Cyberpunk 2077, as well as online
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`multiplayer games.
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`8.
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`CD Projekt is incorporated in Delaware and its head office is located at
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`Building E, ul. Jagiellonska 74, Warsaw 03-301, Poland. CD Projekt’s American
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`Depository Receipts (“ADRs”) trade on the OTC Pink under the ticker symbol
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`“OTGLY”, and its ordinary shares trade on the OTC Pink under the ticker symbol
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`“OTGLF.”
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`9.
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`Defendant Adam Michal Kicinski (“Kicinski”) has served as the
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`Company’s Joint Executive Officer (“CEO”) and as President of the Management
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`Board throughout the Class Period.
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`10. Defendant Piotr Marcin Nielubowicz (“Nielubowicz”) has served as the
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`Company’s Chief Financial Officer (“CFO”) and Vice-President of the Management
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`Board throughout the Class Period.
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`11. Defendant Michał Nowakowski (“Nowakowski”) has served as the vice
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`president of business development and member of the Management Board
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`throughout the Class Period.
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`– 3 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`

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`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 4 of 18 Page ID #:4
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`12. Defendants Kicinski, Nielubowicz, and Nowakowski are sometimes
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`referred to herein as the “Individual Defendants.”
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`13. Each of the Individual Defendants:
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`(a)
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`directly participated in the management of the Company;
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`(b) was directly involved in the day-to-day operations of the Company at
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`the highest levels;
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`(c) was privy to confidential proprietary information concerning the
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`Company and its business and operations;
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`(d) was directly or indirectly involved in drafting, producing, reviewing
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`and/or disseminating the false and misleading statements and
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`information alleged herein;
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`(e) was directly or indirectly involved in the oversight or implementation
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`of the Company’s internal controls;
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`(f) was aware of or recklessly disregarded the fact that the false and
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`misleading statements were being issued concerning the Company;
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`and/or
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`(g)
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`approved or ratified these statements in violation of the federal
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`securities laws.
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`14. The Company is liable for the acts of the Individual Defendants and its
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`employees under the doctrine of respondeat superior and common law principles
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`of agency because all of the wrongful acts complained of herein were carried out
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`within the scope of their employment.
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`15. The scienter of the Individual Defendants and other employees and
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`agents of the Company is similarly imputed to the Company under respondeat
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`superior and agency principles.
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`– 4 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`

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`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 5 of 18 Page ID #:5
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`16. The Company and the Individual Defendants are referred to herein,
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`collectively, as the “Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`Background
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`17. For several years, the Company had been devoting substantially all its
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`resources to the development of Cyberpunk 2077, which the Company described as
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`a “open world, narrative-driven role-playing game.” The game was to be released
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`on various platforms, including Sony’s Playstation 5 and Microsoft’s Xbox X and
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`Xbox (“Next-Generation Consoles”), Microsoft’s Xbox Series One and Sony’s
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`Playstation 4 (the “Current-Generation Consoles”), Windows, and Google’s Stadia.
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`The original release date of the game was slated for April 17, 2020.
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`Materially False and Misleading Statements
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`18. On January 16, 2020, CD Projekt released a statement announcing that
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`though Cyberpunk 2077 was “complete and playable”, the game’s release date
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`would be delayed until September 7, 2020, as the Company “needed more time to
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`finish playtesting, fixing and polishing.”
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`19. On April 8, 2020, the Company published its Annual Report for fiscal
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`year 2019. Accompanying the Annual Report was a Management Board Report,
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`which stated the following concerning Cyberpunk 2077:
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`After the close of the reporting period, on 16 January 2020, the
`Management Board announced that the release date of Cyberpunk 2077
`would be pushed back to 17 September 2020. The Board justified this
`decision by pointing out the need for additional time to fully playtest,
`bugfix and polish the game, thus ensuring that customers receive a top-
`quality product.
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`20. On September 4, 2020 CD Projekt published their financial results for
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`the first half of 2020 via press release. That same day, the Company held a
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`– 5 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`

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`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 6 of 18 Page ID #:6
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`conference call to discuss its results. There, Defendant Kicinski stated the following
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`concerning Cyberpunk 2077’s release:
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`So –yes, we are confirming and, well, actually today we started
`preparing for the final certification, so we’re very close. Of course we’ll
`work on the title till the very end; that’s kind of normal. It’s a huge
`game, but as we said –everything is on track and we’re planning to
`launch it on 19 November.
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`*
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`*
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`*
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`[T]he current version, which will be released in November, will be
`playable from the beginning when next-gen consoles are released; you
`will be able to play the current-gen version on next-gen from day 1.
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`21. On October 28, 2020, CD Projekt held a conference call. There,
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`Defendant Kicinski announced that the release date for Cyberpunk 2077 would be
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`delayed by three weeks to fix issues with the Current-Generation Console versions,
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`stating that “even though the game has been certified on the current gens by both
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`Sony and Microsoft, some very final optimization processes for such a massive and
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`complex game require a bit of additional time.” He elaborated that “the game is
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`releasable on the 19th and having those 3 more weeks just gives us more changes to
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`fix this and that –so we feel secure.”
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`22. During the call, when asked about problems with the Current-
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`Generation Console versions, Defendant Nowakowski stated:
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` I wouldn’t say there is a “problem” because there’s nothing wrong with
`Xbox or PS4 versions –there is optimization to be handled, also because
`of how we were approaching things from the get-go in terms of
`development; so –there is no problem with Xbox or PlayStation 4, to
`be honest.
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`23. On November 25, 2020, CD Projekt published their financial results for
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`the third quarter of 2020 via press release. With respect to Cyberpunk 2077, the press
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`– 6 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`

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`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 7 of 18 Page ID #:7
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`release stated that “[p]ositive impressions on the part of journalists, and in particular
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`their remarks which underscore the complexity and amazing ambience of Night City
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`make us very happy and confirm the remarkable potential of Cyberpunk.”
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`24. The Company held a conference call to discuss their quarterly results
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`that same day. During the call, Defendant Kicinski, when asked about the state of
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`the Cyberpunk 2077, stated “we believe that the game is performing great on every
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`platform.” He elaborated the following concerning Cyberpunk 2077’s release:
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`The game will be launched on PC, Xbox One, PlayStation 4 and Stadia.
`Just days ago, next-gen consoles were released and our title will run
`great on Xbox Series X and S, as well as PlayStation 5 from the very
`beginning, thanks to their backward compatibility. We are excited to be
`able to bring our game to more players than ever before.
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`*
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`*
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`*
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`In the past few days, we released two trailers presenting gameplay on
`current and next-gen consoles. The extra time gained by postponing the
`release is being used to further optimize the game, and we feel that it
`was the right decision.
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`*
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`*
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`*
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`We still QA the game. We boasted -- but we do it both internally and
`externally. We used to tour three, I'm not sure, external teams. So, we
`cooperate with some companies and the game will be tested by the
`launch date and that's natural part of the process.
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`25. During the call, when asked about potential bugs, Defendant Kicinksi
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`stated that:
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`“So, in terms of bugs, we are all aware of them. Of course, such a big
`game can't be just bug free. That's the kind of obvious, but we believe
`that the level will be as low as to let gamers not see them. And
`fortunately, some bugs extended previous were caused by some general
`-- I would say general features and many of them are already fixed. So,
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`– 7 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 8 of 18 Page ID #:8
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`what gamers will get will be different from what -- and what we viewers
`will get in this final review is it's better than what previewers, got.
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`26. The statements contained in ¶¶18-25 were materially false and/or
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`misleading because they misrepresented and failed to disclose the following adverse
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`facts pertaining to the Company’s business, operations and prospects, which were
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`known to Defendants or recklessly disregarded by them. Specifically, Defendants
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`made false and/or misleading statements and/or failed to disclose that: (1)
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`Cyberpunk 2077 was virtually unplayable on the current-generation Xbox or
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`Playstation systems due to an enormous number of bugs; (2) as a result, Sony would
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`remove Cyberpunk 2077 from the Playstation store, and Sony, Microsoft and the
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`Company would be forced to offer full refunds for the game; (3) consequently, the
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`Company would suffer reputational and pecuniary harm; and (4) as a result,
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`Defendants’ statements about its business, operations, and prospects, were
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`materially false and misleading and/or lacked a reasonable basis at all relevant times.
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`The Truth Emerges
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`27. The Company launched Cyberpunk 2077 on December 10, 2020.
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`Consumers soon discovered that the Current-Generation Console versions of
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`Cyberpunk 2077 were error-laden and difficult to play. IGN published a scathing
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`review, stating that the Console versions “fail[] to hit even the lowest bar of technical
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`quality one should expect even when playing on lower-end hardware. [Cyberpunk
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`2077] performs so poorly that it makes combat, driving, and what is otherwise a
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`master craft of storytelling legitimately difficult to look at.”
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`28. On December 14, 2020, facing criticisms for delivering an unplayable,
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`bug-ridden product on the Consoles, the Company held a conference call. During
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`SECURITIES LAWS
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`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 9 of 18 Page ID #:9
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`the call, Defendant Kicinski called the Current-Generation Console versions “way
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`below our expectations,” and stated the following:
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`After 3 delays, we as the Management Board were too focused on
`releasing the game. We underestimated the scale and complexity of
`the issues, we ignored the signals about the need for additional time
`to refine the game on the base last-gen consoles. It was the wrong
`approach and against our business philosophy. On top of that, during
`the campaign, we showed the game mostly on PCs.
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`29. During that same call, Defendant Nielubowicz stated “we definitely did
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`not spend enough time looking at that,” when referring to issues with the Current-
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`Generation Console versions.
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`30. Following the release, the Company’s ADRs fell from its close of
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`$27.68 on December 9, 2020 to close at $20.75 on December 14, 2020, a drop of
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`$6.93 or 25% over 3 trading days, damaging investors. Over that same period, CD
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`Projekt’s common share (OTGLF) price fell $21.65 per share, or 20.1%, to close at
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`$86.00 on December 14, 2020, damaging investors..
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`31. Then, on December 18, 2020, Sony issued a statement via the
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`Playstation website that it would “offer a full refund for all gamers who have
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`purchased Cyberpunk 2077 via PlayStation Store” and “be removing Cyberpunk
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`2077 from PlayStation Store until further notice.” Microsoft also announced that it
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`would offer refunds for the game.
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`32. That same day, the Company stated that Sony’s decision to
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`“temporarily suspend” sales of the game came after a discussion with the Company.
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`33. On this news, CD Projekt’s ADR (OTGLY) price fell $3.44 per share,
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`or 15.8%, to close at $18.50 per ADR on December 18, 2020, damaging investors.
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`CD Projekt’s common share (OTGLF) price fell $9.20 per share, or 10.45%, to close
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`at $78.80 on December 18, 2020, damaging investors.
`– 9 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`

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`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 10 of 18 Page ID #:10
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`34. As a result of Defendants’ wrongful acts and omissions, and the decline
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`in the market value of the Company’s securities, Plaintiff and other Class members
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`have suffered significant losses and damages.
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`PLAINTIFF’S CLASS ACTION ALLEGATIONS
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`35. Plaintiff brings this action as a class action pursuant to Federal Rule of
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`Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who
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`purchased or otherwise acquired the publicly traded securities of CD Projekt during
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`the Class Period (the “Class”) and were damaged upon the revelation of the alleged
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`corrective disclosure. Excluded from the Class are Defendants herein, the officers
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`and directors of the Company, at all relevant times, members of their immediate
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`families and their legal representatives, heirs, successors or assigns and any entity
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`in which Defendants have or had a controlling interest.
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`36. The members of the Class are so numerous that joinder of all members
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`is impracticable. Throughout the Class Period, the Company’s securities were
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`actively traded on OTC. While the exact number of Class members is unknown to
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`Plaintiff at this time and can be ascertained only through appropriate discovery,
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`Plaintiff believes that there are hundreds or thousands of members in the proposed
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`Class. Record owners and other members of the Class may be identified from
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`records maintained by the Company or its transfer agent and may be notified of the
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`pendency of this action by mail, using the form of notice similar to that customarily
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`used in securities class actions.
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`37. Plaintiff’s claims are typical of the claims of the members of the Class
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`as all members of the Class are similarly affected by Defendants’ wrongful conduct
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`in violation of federal law that is complained of herein.
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`– 10 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 11 of 18 Page ID #:11
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`38. Plaintiff will fairly and adequately protect the interests of the members
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`of the Class and has retained counsel competent and experienced in class and
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`securities litigation. Plaintiff has no interests antagonistic to or in conflict with those
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`of the Class.
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`39. Common questions of law and fact exist as to all members of the Class
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`and predominate over any questions solely affecting individual members of the
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`Class. Among the questions of law and fact common to the Class are:
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`(a) whether Defendants’ acts as alleged violated the federal securities
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`laws;
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`(b) whether Defendants’ statements to the investing public during the
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`Class Period misrepresented material facts about the financial
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`condition, business, operations, and management of the Company;
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`(c) whether Defendants’ statements to the investing public during the
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`Class Period omitted material facts necessary to make the statements
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`made, in light of the circumstances under which they were made, not
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`misleading;
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`(d) whether the Individual Defendants caused the Company to issue false
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`and misleading filings and public statements during the Class Period;
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`(e) whether Defendants acted knowingly or recklessly in issuing false and
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`misleading filings and public statements during the Class Period;
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`(f) whether the prices of the Company’s securities during the Class Period
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`were artificially inflated because of the Defendants’ conduct
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`complained of herein; and
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`(g) whether the members of the Class have sustained damages and, if so,
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`what is the proper measure of damages.
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`– 11 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
`
`

`

`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 12 of 18 Page ID #:12
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`40. A class action is superior to all other available methods for the fair and
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`efficient adjudication of this controversy since joinder of all members is
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`impracticable. Furthermore, as the damages suffered by individual Class members
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`may be relatively small, the expense and burden of individual litigation make it
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`impossible for members of the Class to individually redress the wrongs done to
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`them. There will be no difficulty in the management of this action as a class action.
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`41. Plaintiff will rely, in part, upon the presumption of reliance established
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`by the fraud-on-the-market doctrine in that:
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`(a) Defendants made public misrepresentations or failed to disclose
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`(b)
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`(c)
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`(d)
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`(e)
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`(f)
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`material facts during the Class Period;
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`the omissions and misrepresentations were material;
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`the Company’s securities are traded in efficient markets;
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`the Company’s securities were liquid and traded with moderate to
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`heavy volume during the Class Period;
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`the Company traded on OTC, and was covered by multiple analysts;
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`the misrepresentations and omissions alleged would tend to induce a
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`reasonable investor to misjudge the value of the Company’s securities;
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`Plaintiff and members of the Class purchased and/or sold the
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`Company’s securities between the time the Defendants failed to
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`disclose or misrepresented material facts and the time the true facts
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`were disclosed, without knowledge of the omitted or misrepresented
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`facts; and
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`(g) Unexpected material news about the Company was rapidly reflected
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`in and incorporated into the Company’s stock price during the Class
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`Period.
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`– 12 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
`
`

`

`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 13 of 18 Page ID #:13
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`42. Based upon the foregoing, Plaintiff and the members of the Class are
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`entitled to a presumption of reliance upon the integrity of the market.
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`43. Alternatively, Plaintiff and the members of the Class are entitled to the
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`presumption of reliance established by the Supreme Court in Affiliated Ute Citizens
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`of the State of Utah v. United States, 406 U.S. 128, 92 S. Ct. 2430 (1972), as
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`Defendants omitted material information in their Class Period statements in
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`violation of a duty to disclose such information, as detailed above.
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`COUNT I
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`Violation of Section 10(b) of The Exchange Act and Rule 10b-5
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`Against All Defendants
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`44. Plaintiff repeats and realleges each and every allegation contained
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`above as if fully set forth herein.
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`45. This Count is asserted against the Company and the Individual
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`Defendants and is based upon Section 10(b) of the Exchange Act, 15 U.S.C. §
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`78j(b), and Rule 10b-5 promulgated thereunder by the SEC.
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`46.
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` During the Class Period, the Company and the Individual Defendants,
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`individually and in concert, directly or indirectly, disseminated or approved the
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`false statements specified above, which they knew or deliberately disregarded were
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`misleading in that they contained misrepresentations and failed to disclose material
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`facts necessary in order to make the statements made, in light of the circumstances
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`under which they were made, not misleading.
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`47. The Company and the Individual Defendants violated §10(b) of the
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`1934 Act and Rule 10b-5 in that they: employed devices, schemes and artifices to
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`defraud; made untrue statements of material facts or omitted to state material facts
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`necessary in order to make the statements made, in light of the circumstances under
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`– 13 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
`
`

`

`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 14 of 18 Page ID #:14
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`which they were made, not misleading; and/or engaged in acts, practices and a
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`course of business that operated as a fraud or deceit upon plaintiff and others
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`similarly situated in connection with their purchases of the Company’s securities
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`during the Class Period.
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`48. The Company and the Individual Defendants acted with scienter in that
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`they knew that the public documents and statements issued or disseminated in the
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`name of the Company were materially false and misleading; knew that such
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`statements or documents would be issued or disseminated to the investing public;
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`and knowingly and substantially participated, or acquiesced in the issuance or
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`dissemination of such statements or documents as primary violations of the
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`securities laws. These defendants by virtue of their receipt of information reflecting
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`the true facts of the Company, their control over, and/or receipt and/or modification
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`of the Company’s allegedly materially misleading statements, and/or their
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`associations with the Company which made them privy to confidential proprietary
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`information concerning the Company, participated in the fraudulent scheme alleged
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`herein.
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`49.
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` Individual Defendants, who are the senior officers and/or directors of
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`the Company, had actual knowledge of the material omissions and/or the falsity of
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`the material statements set forth above, and intended to deceive Plaintiff and the
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`other members of the Class, or, in the alternative, acted with reckless disregard for
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`the truth when they failed to ascertain and disclose the true facts in the statements
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`made by them or other personnel of the Company to members of the investing
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`public, including Plaintiff and the Class.
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`50. As a result of the foregoing, the market price of the Company’s
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`securities was artificially inflated during the Class Period. In ignorance of the falsity
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`– 14 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
`
`

`

`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 15 of 18 Page ID #:15
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`
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`of the Company’s and the Individual Defendants’ statements, Plaintiff and the other
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`members of the Class relied on the statements described above and/or the integrity
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`of the market price of the Company’s securities during the Class Period in
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`purchasing the Company’s securities at prices that were artificially inflated as a
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`result of the Company’s and the Individual Defendants’ false and misleading
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`statements.
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`51. Had Plaintiff and the other members of the Class been aware that the
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`market price of the Company’s securities had been artificially and falsely inflated
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`by the Company’s and the Individual Defendants’ misleading statements and by the
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`material adverse information which the Company’s and the Individual Defendants
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`did not disclose, they would not have purchased the Company’s securities at the
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`artificially inflated prices that they did, or at all.
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`52.
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` As a result of the wrongful conduct alleged herein, Plaintiff and other
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`members of the Class have suffered damages in an amount to be established at trial.
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`53. By reason of the foregoing, the Company and the Individual
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`Defendants have violated Section 10(b) of the 1934 Act and Rule 10b-5
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`promulgated thereunder and are liable to the Plaintiff and the other members of the
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`Class for substantial damages which they suffered in connection with their
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`purchases of the Company’s securities during the Class Period.
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`COUNT II
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`Violation of Section 20(a) of The Exchange Act
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`Against The Individual Defendants
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`54. Plaintiff repeats and realleges each and every allegation contained in
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`the foregoing paragraphs as if fully set forth herein.
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`– 15 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`

`

`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 16 of 18 Page ID #:16
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`55. During the Class Period, the Individual Defendants participated in the
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`operation and management of the Company, and conducted and participated,
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`directly and indirectly, in the conduct of the Company’s business affairs. Because
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`of their senior positions, they knew the adverse non-public information regarding
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`the Company’s business practices.
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`56. As officers and/or directors of a publicly owned company, the
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`Individual Defendants had a duty to disseminate accurate and truthful information
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`with respect to the Company’s financial condition and results of operations, and to
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`correct promptly any public statements issued by the Company which had become
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`materially false or misleading.
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`57. Because of their positions of control and authority as senior officers,
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`the Individual Defendants were able to, and did, control the contents of the various
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`reports, press releases and public filings which the Company disseminated in the
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`marketplace during the Class Period. Throughout the Class Period, the Individual
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`Defendants exercised their power and authority to cause the Company to engage in
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`the wrongful acts complained of herein. The Individual Defendants therefore, were
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`“controlling persons” of the Company within the meaning of Section 20(a) of the
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`Exchange Act. In this capacity, they participated in the unlawful conduct alleged
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`which artificially inflated the market price of the Company’s securities.
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`58. Each of the Individual Defendants, therefore, acted as a controlling
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`person of the Company. By reason of their senior management positions and/or
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`being directors of the Company, each of the Individual Defendants had the power
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`to direct the actions of, and exercised the same to cause, the Company to engage in
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`the unlawful acts and conduct complained of herein. Each of the Individual
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`Defendants exercised control over the general operations of the Company and
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`– 16 –
`CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL
`SECURITIES LAWS
`
`

`

`Case 2:20-cv-11627 Document 1 Filed 12/24/20 Page 17 of 18 Page ID #:17
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`possessed the power to control the specific activities which comprise the primary
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`violations about which Plaintiff and the other members of the Class complain.
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`59. By reason of the above conduct, the Individual Defendants are liable
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`pursuant to Section 20(a) of the Exchange Act for the violations committed by the
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`C