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SEC fines Cheesecake Factory for misleading revelations about virus impact



(Reuters) – The US Securities and Exchange Commission said on Friday that it had fined the restaurant chain The Cheesecake Factory $ 125,000 for regulating charges they misled investors about the pandemic's impact on its operations, the first case brought by Regulatory Authority

On March 23 and April 3, the company reported that its restaurants "operated sustainably" when internal documents actually showed that they lost about $ 6 million a week due to pandemic closures and had only about 16 weeks of cash. left, said the SEC.

Although the company did not disclose this information to 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 Cheesecake Factory failed to announce in March that it had already informed its landlords that it would not pay rent in April due to the damage COVID-1

9 had caused its operations.

Cheesecake Factory & # 39 ;s attorney did not immediately respond to a request for comment.

Although the SEC penalty is small, it underscores the regulatory risks that COVID-19 has created for public companies struggling with how best to communicate the impact of the pandemic to investors, with misconduct lawyers predicting similar SEC actions.

Reuters reported in May that the SEC had asked public companies that took emergency aid to prove their eligibility for the funds and had made consistent statements to investors about their need for support.

"When public investment firms describe the impact of COVID-19 on their business, they must speak correctly," said SEC Executive Director Stephanie Avakian. [19659002] "The Supervisory Department … will continue to review COVID-related disclosures to: ensure that investors receive accurate information in a timely manner, while providing appropriate credit for prompt and comprehensive cooperation in investigations. "

More insurance and risk management news on the coronavirus crisis here . [19659002]

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