Phillips & Cohen partner Erika Kelton explains the importance of the recent SEC enforcement action against Cheesecake Factory in an article for Accounting Today.
The recent settlement that Cheesecake Factory paid to the Securities Exchange Commission was relatively small, but it conveyed a big message: Public companies must accurately disclose the current and anticipated material impacts of COVID-19 on their operations and financial condition.
Despite the economic uncertainty the pandemic is causing most companies, the SEC has stayed vigilant regarding disclosure requirements. Companies must accurately disclose their financial and operating status, as well as how their operations and financial condition might change as a result of the coronavirus. The SEC has said it would not second-guess good faith efforts to provide “appropriately framed” forward-looking information and noted the safe-harbors for such statements.
However, companies may not privately provide financial information to lenders and potential private equity investors that differs substantially from the information they provide to the SEC and the public, as the SEC alleged Cheesecake Factory did.
Read the entire article, “The SEC fires warning shot about COVID-19 disclosures,” on Accounting Today’s website.