Previous | The perfect storm for estate planning Next | Student loans have a variety of repayment options
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
Student loans have a variety of repayment options
Student loans have a variety of repayment options

Student loans have a variety of repayment options

November 23, 2023 / F&M Trust

Plan for the future when leaving your job
Plan for the future when leaving your job

Plan for the future when leaving your job

November 16, 2023 / Levi Crouse

How to spot and prevent financial abuse
How to spot and prevent financial abuse

How to spot and prevent financial abuse

November 09, 2023 / Ray Wills

What does America’s credit downgrade mean?
What does America’s credit downgrade mean?

What does America’s credit downgrade mean?

November 02, 2023 / Warren Hurt

Choosing the right self-employed retirement plan
Choosing the right self-employed retirement plan

Choosing the right self-employed retirement plan

October 23, 2023 / Chris Moore

What is PMI and do I need it?
What is PMI and do I need it?

What is PMI and do I need it?

October 16, 2023 / Dave Kuhns

Should I consider buying pet insurance?
Should I consider buying pet insurance?

Should I consider buying pet insurance?

October 09, 2023 / Jill Reddecliff

Frugality is a valuable financial tool
Frugality is a valuable financial tool

Frugality is a valuable financial tool

October 02, 2023 / Shelby Yinger

How you give is as important as what you give
How you give is as important as what you give

How you give is as important as what you give

September 25, 2023 / Matt Berger

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.