Previous | The perfect storm for estate planning Next | Mortgage tips for first time home buyers
January 23, 2021 / Shelby White
Investor Alert: Cheesecake Factory settles with SEC

Investor Alert: Cheesecake Factory settles with SEC

The Cheesecake Factory Inc. is the first public company to be charged by the Securities and Exchange Commission (SEC) for misleading investors about the financial effects of the pandemic on their business.

Regulators say the company made misleading disclosures about the impact of the COVID-19 pandemic on its business operations and financial condition in its March and April filings, according to a press release issued by the commission on December 4, 2020.

man standing with financial icons around himThe Cheesecake Factory claimed its restaurants were “operating sustainably” during the pandemic. But that’s not true, according to the SEC, which says the company’s internal documents at the time showed that The Cheesecake Factory was losing approximately $6 million in cash per week with just 16 weeks of cash left.

The company also neglected to mention that it informed its landlords it would be skipping April rent due to coronavirus-related business impact.

“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.”

Without admitting to the findings in the order, The Cheesecake Factory agreed to pay a $125,000 penalty and stop leaving things out.

“When public companies describe for investors the impact of COVID-19 on their business, they must speak accurately,” Director of the Division of Enforcement Stephanie Avakian said in a statement. “The Enforcement Division, including the Coronavirus Steering Committee, 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.”
 

Shelby White is the corporate communications officer at F&M Trust

Recent Articles
Mortgage tips for first time home buyers
Mortgage tips for first time home buyers

Mortgage tips for first time home buyers

January 25, 2023 / David Kuhns

Charitable Giving; A donor-advised fund offers tax benefits
Charitable Giving; A donor-advised fund offers tax benefits

Charitable Giving; A donor-advised fund offers tax benefits

January 20, 2023 / The Merrill Anderson Company

Why entrepreneurs find it hard to ask for help
Why entrepreneurs find it hard to ask for help

Why entrepreneurs find it hard to ask for help

January 16, 2023 / Patti Murray

Why the IRS is still catching up
Why the IRS is still catching up

Why the IRS is still catching up

January 06, 2023 / The Merrill Anderson Company

Lease vs Buy: Which is Better for My Business?
Lease vs Buy: Which is Better for My Business?

Lease vs Buy: Which is Better for My Business?

December 22, 2022 / Jeramy Culler

Stabilizing Your Business' Cash Flow
Stabilizing Your Business' Cash Flow

Stabilizing Your Business' Cash Flow

December 15, 2022 / Jeramy Culler

Social Security COLA Increase is Biggest Since 1981
Social Security COLA Increase is Biggest Since 1981

Social Security COLA Increase is Biggest Since 1981

December 08, 2022 / The Merrill Anderson Company

How to Protect Yourself After a Data Breach
How to Protect Yourself After a Data Breach

How to Protect Yourself After a Data Breach

December 01, 2022 / Ray Wills

Protecting Your Business Debit Card
Protecting Your Business Debit Card

Protecting Your Business Debit Card

November 24, 2022 / Ray Wills

Join our e-newsletter

Sign up for our e-newsletter to get new content each month.

NOTICE: YOU ARE LEAVING F&M TRUST!

You are now leaving the F&M Trust website. Links to third-party sites are provided for your convenience. Such sites are not within our control and may not follow the same privacy, security or accessibility standards as ours. F&M Trust neither endorses nor guarantees offerings of the third-party providers, nor is F&M Trust responsible for the security, content or availability of third-party sites, their partners or advertisers.