The Cheesecake Factory To Pay $125,000 To Settle SEC Allegations It Misled Investors

CALABASAS (CBSLA) — The Cheesecake Factory has settled allegations from the Securities And Exchange Commission that the restaurant chain made misleading disclosures to investors about how the pandemic impacted its operations and financial condition.

The Calabasas-based corporation has agreed to pay a $125,000 penalty and to cease-and-desist from further violations of the charged provisions.

The Cheesecake Factory stated in its March and April filings that its locations were "operating sustainably" during the COVID-19 pandemic, even as internal documents showed the company was losing approximately $6 million in cash per week and that they projected they only had 16 weeks of cash remaining, according to the SEC.

According to the SEC's allegations, while the company did not disclose its financial troubles to its investors, they did share it with potential private equity investors or lenders in an apparent effort to "seek additional liquidity." The SEC's order also found that the Cheesecake Factory also failed to disclose in its filings that it had already informed its landlords it would not pay rent in April because of the pandemic.

The Cheesecake Factory is the first public company to be charged by the SEC for allegedly misleading investors about the financial effects of the pandemic.