Cheesecake Factory settles accusations of deceptive investors on its

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In March and April, as many restaurants were instructed to close their doors in an attempt to curb the spread of the novel coronavirus, the Cheesecake Factory (CAKE) assured investors through financial documents that its pickup and delivery activity allows the chain to operate “sustainably”.

But internal documents paint a very different picture, according to the SEC. These documents said the company was losing about $ 6 million in cash every week and only had about four months of cash left.

Also in March, the company told its owners it would not be able to pay the April rent, according to the SEC. But he did not mention this information to investors in a March 23 filing on the steps he was taking to help protect the company. The inability to pay rent was later made public.

The discrepancies meant that the company’s March and April notices were “materially false and misleading,” the SEC said in its order detailing the fees and settlement. This is the first time the SEC has accused a state-owned company of misleading investors about the impact of Covid-19 on business.

In response to a request for comment from CNN Business, a Cheesecake Factory spokesperson pointed out on a Friday financial record indicating the company “fully cooperated with the SEC” with respect to the settlement, “without admitting or denying the SEC’s allegations.”

Casual restaurants like the Cheesecake Factory, which have long presented themselves to customers as a place to visit with friends and family, have been hit particularly hard during the pandemic.

Some chains, including Sizzler, California Pizza Kitchen and CEC Entertainment, parent company of Chuck E. Cheese, declared bankruptcy during the crisis.

Cheesecake Factory saw its sales decline during the crisis. In the 13 weeks that ended on September 29, sales at Cheesecake Factory restaurants that have been open for at least a year have fallen about 23% from the same period the previous year.

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