The Cheesecake Factory slammed with $125,000 fine by the SEC over claims it lied to investors about how much money its restaurants were actually losing during the pandemic

• The Cheesecake Factory has agreed to pay $125,000 to settle claims that it broke federal securities law with its financial disclosures during the pandemic.
• The SEC said Friday that the restaurant chain failed to disclose dire financial forecasts to public investors as it raced to find liquidity in March and April.
• Internally, the SEC said, the company said it had just 16 weeks of cash on hand and was telling landlords it couldn't pay rent.

When The Cheesecake Factory told investors in March that it was "operating sustainably," it was actually forecasting just 16 weeks of cash remaining and telling landlords its couldn't pay rent, according to the Securities and Exchange Commission.

Because of the omissions, the chain agreed to pay a $125,000 federal fine, the SEC said Friday, in the first regulatory action against a company over claims of illegal actions during the pandemic. The Cheesecake Factory agreed to the fine without admitting to the charges.

Despite withholding the fact it was losing $6 million per week from the public, the company - which operates nearly 300 restaurants throughout the US and Canada - told other potential private equity investors about the situation as it looked for more liquidity to pad its balance sheets, the SEC said.

A company representative declined to comment on the fine beyond a regulatory filing alerting investors to the settlement. Shares were down about 1% in early trading Friday following the SEC's statement, and have mostly recovered their heavy losses from earlier this year.

"When public companies describe for investors the impact of COVID-19 on their business, they must speak accurately," Stephanie Avakian, head of the SEC's enforcement division, said in the release. "The Enforcement Division, including the Coronavirus Steering Committee, will continue to scrutinize COVID-related disclosures to ensure that investors receive accurate, timely information, while also giving appropriate credit for prompt and substantial cooperation in investigations."

The SEC commended The Cheesecake Factory's cooperation in its investigation.