Friday, January 15, 2021
COVID-related securities claims continue to rattle the marketplace. On December 7, a leading plaintiffs firm announced an investigation on behalf of shareholders of The Cheesecake Factory Inc., just days after the SEC announced it was settling charges against the company for making misleading disclosures about the impact of the COVID-19 pandemic on its business operations and financial condition. The SEC’s action was its first charging a public company for actions tied to the worldwide pandemic.
In SEC filings in March and April, The Cheesecake Factory disclosed that its restaurants were “operating sustainably” during the pandemic. The SEC order, however, states that on March 18, 2020, the company sent a letter to its landlords saying it would not be paying rent in April 2020 due to a “severe decrease in restaurant traffic [due to COVID-19 that] has severely decreased our cash flow and inflicted a tremendous financial blow to our busines