The U.S. Securities and Exchange Commission announced Dec. 4 that it settled charges against The Cheesecake Factory for making misleading disclosures about the impact of COVID-19 on its business.
The Calabasas-based restaurant chain made statements in its March 23and April 3 filings that it was operating sustainably. According to the SEC, those filings were materially false and misleading because the company’s internal documents at the time showed the chain was losing $6 million per week and that it only had 16 weeks of cash left.
Those filings also failed to inform investors that The Cheesecake Factory already told landlords it would not pay April rent because of the impact COVID-19 was having on its business.
The Cheesecake Factory did not admit to the findings in the report, but agreed to pay a $125,000 penalty and to cease and desist from any further violations of the charged provisions.
“During the pandemic, many public companies have discharged their disclosure obligations in a commendable manner, working proactively to keep investors informed of the current and anticipated material impacts of COVID-19 on their operations and financial condition,” SEC Chairman Jay Clayton said in a statement. “As our local and national response to the pandemic evolves, it is important that issuers continue their proactive, principles-based approach to disclosure, tailoring these disclosures to the firm and industry-specific effects of the pandemic on their business and operations. It is also important that issuers who make materially false or misleading statements regarding the pandemic’s impact on their business and operations be held accountable.”