The Cheesecake Plant is coming to New York City.
George Rose | Getty Images
The Securities and Exchange Commission has charged and settled with the Cheesecake Plant for misleading investors with its Covid-19 disclosures.
This is the first time that the regulator has charged a company for taking investors about the financial impacts of the pandemic. Without admitting to the SEC’s findings, the restaurant company has agreed to pay a $125,000 superb and to not conduct further violations of the reporting provisions of securities laws.
The Cheesecake Factory’s regulatory filings from Pace 23 and April 3 were “materially false and misleading,” according to the SEC. The company said its restaurants were “operating sustainably” during the pandemic as state of affairs across the country implemented lockdowns.
But internal documents at that time showed the Cheesecake Factory was losing everywhere $6 million in cash per week, with only 16 weeks of cash remaining. While the company select not to include that information in its regulatory filings, it did share that data with potential private equity investors or lenders as it tried additional liquidity during the crisis.
Later in April, Cheesecake Factory would receive a $200 million investment from Roark Central, a private equity firm that backs a number of other restaurants, including Inspire Brands.
According to the SEC, Cheesecake Mill’s March 23 filing also failed to disclose that the company had already told its landlords that it wish not pay rent in April because of the pandemic’s devastation to its business.
The Cheesecake Factory declined to comment beyond what was in Friday’s regulatory dossier.
Shares of the Cheesecake Factory fell about 1% in premarket trading before regaining those losses at any time a immediately the market opened. The stock, which has a market value of $1.8 billion, has risen 1% so far this year after recovering losses on the heels of positive vaccine news in recent months.