Name: U.S. regulator fines The Cheesecake Factory for misleading COVID-19 impact disclosures
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U.S. regulator fines The Cheesecake Factory for misleading COVID-19 impact disclosures

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By WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission said on Friday it had fined restaurant chain The Cheesecake Factory $125,000 to settle charges that it misled investors about the impact of the pandemic on its business, the first such case brought by the regulator.In March 23 and April 3 regulatory filings, the company said its restaurants were “operating sustainably” when in fact internal documents showed it was losing approximately $6 million per week due to pandemic lockdowns and had only about 16 weeks’ of cash remaining, the SEC said.Although the company did not disclose this information with public investors, it did share it with potential private equity investors and lenders as it sought additional liquidity, the SEC said. The regulator’s probe also found that The Cheesecake Factory failed to disclose in its March filing that it had already informed its landlords that it would not pay rent in April due to the harm COVID-19 had inflicted on its business.The company said in a statement that it had “fully cooperated with the SEC,” and neither admitted nor denied its allegations.While Friday’s penalty is small, it underscores the regulatory risks COVID-19 has created for public companies wrestling with how best to communicate the pandemic’s impact, with white collar crime lawyers predicting similar SEC actions.Reuters reported in May that the SEC had asked public companies that took emergency pandemic aid to prove they qualified for the funds and had made consistent representations to investors about their need for the aid.“When public companies describe for investors the impact of COVID-19 on their business, they must speak accurately,” said SEC Director of Enforcement Stephanie Avakian.“The Enforcement Division... will continue to scrutinize COVID-related disclosures to ensure that investors receive accurate, timely information, while also giving appropriate credit for prompt and substantial cooperation in investigations.”Reporting by Michelle Price; Editing by Chizu Nomiyama and Dan GreblerOur Standards:

By WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission said on Friday it had fined restaurant chain The Cheesecake Factory $125,000 to settle charges that it misled investors about the impact of the pandemic on its business, the first such case brought by the regulator.In March 23 and April 3 regulatory filings, the company said its restaurants were “operating sustainably” when in fact internal documents showed it was losing approximately $6 million per week due to pandemic lockdowns and had only about 16 weeks’ of cash remaining, the SEC said.Although the company did not...

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U.S. regulator fines The Cheesecake Factory for misleading COVID-19 impact disclosures

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