SEC Issues First Charges For False Disclosures Concerning The COVID-19 Pandemic

While the COVID-19 pandemic has caused enormous challenges to public companies' day-to-day operations, it has also introduced new complexities to their public disclosure obligations. As the Securities and Exchange Commission's (SEC) recent charges against a large restaurant chain make clear, regulators are monitoring public companies to ensure that they timely disclose material changes to operations and financial condition. Companies must ensure that they do not omit information that might render any public statement misleading, particularly as to the impacts of the pandemic.

On December 4, 2020, the SEC announced its first action charging a public company for alleged misleading statements to investors about the financial impacts of the pandemic. In an order imposing charges pursuant to a settlement, the SEC found that The Cheesecake Factory, Inc. made materially misleading statements regarding the impact of the pandemic on its operations and financial condition