- Restaurant chain The Cheesecake Factory falsely told investors it was operating sustainably, the Securities and Exchange Commission (SEC) said on Friday.
- In its announcement, the agency said it had reached a settlement with the company on the charges.
- "It is ... important that issuers who make materially false or misleading statements regarding the pandemic’s impact on their business and operations be held accountable," SEC Chairman Jay Clayton said in a statement.
This is the SEC's first action charging a public company for misleading investors about the pandemic's financial impact.
The company in March and April publicly described itself as "operating sustainably" during the pandemic, a materially false and misleading statement, the SEC says, because internal documents showed it was losing $6 million in cash a week and had only 16 weeks of cash remaining.
Privately, the company shared its financial position with potential equity investors and lenders as it sought to boost its liquidity.
The company also didn't disclose it had told landlords it wouldn't pay rent in April. Instead, it said in its reporting it was taking steps to preserve its financial flexibility.
The disclosure failures violate reporting provisions of federal securities laws, the SEC says. Without admitting the findings in the order, the company agreed to pay a $125,000 penalty. The SEC says the penalty reflects the company's cooperation with the investigation.
"When public companies describe for investors the impact of COVID-19 on their business, they must speak accurately," said Stephanie Avakian, the SEC's director of enforcement.