Dec. 4 (UPI) -- U.S. regulators announced Friday they have settled charges against The Cheesecake Factory for making misleading disclosures about the impact of COVID-19 on its restaurants.
The Securities and Exchange Commission said the chain, without admitting wrongdoing, agreed to pay a $125,000 penalty and to desist from further violations of SEC rules.
Officials said the action is the commission's first charging of a public company for misleading investors about the financial effects of the pandemic.
SEC Chairman Jay Clayton said that although many companies have done a "commendable job" informing investors about the impacts of the coronavirus, some have not.
It is important "that issuers who make materially false or misleading statements regarding the pandemic's impact on their business and operations be held accountable," he said.
The SEC said the chain publicly stated its restaurants were "operating sustainably" during the pandemic while internal documents showed it was actually losing $6 million per week and was on pace to run out of cash in 16 weeks.
That information was not disclosed to public investors, investigators found, but it was shared with potential investors and lenders in an effort to seek additional liquidity.
The Cheesecake Factory also failed to report that it told landlords that it wouldn't pay rent in April due to the impact of the crisis, the SEC said.
