Cheesecake Factory Settles SEC Charges Over Covid Statements
(Bloomberg) -- The U.S. Securities and Exchange Commission said it has settled charges against Cheesecake Factory Inc. over “materially false and misleading” statements after the restaurant chain failed to disclose the financial impact of the coronavirus pandemic earlier this year.
Cheesecake Factory, which didn’t admit findings in the order, will pay a $125,000 penalty and will cease and desist from further violations of federal securities laws, the SEC said Friday in a statement. The company said in a separate regulatory filing that it “fully cooperated with the SEC in connection with the settlement.” A company representative declined to comment further.
According to the SEC’s order, Cheesecake Factory said in filings March 23 and April 3 that its restaurants were “operating sustainably,” while failing to disclose that the company was losing approximately $6 million in cash per week and had just 16 weeks of cash remaining. The company shared the information with private equity investors or lenders in an effort to seek additional liquidity, the SEC said.
The SEC action is the first charging of a public company for misleading investors over the pandemic’s financial impact, the agency said.
Cheesecake Factory’s shares were little changed at 11:07 a.m. in New York. They were up 1.5% this year through Thursday.
©2020 Bloomberg L.P.