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Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

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Illustration: Sarah Grillo/Axios

The Cheesecake Factory this morning became the first public company charged by the SEC with misleading investors about the pandemic's financial impact on its business.

Driving the news: The SEC claims that the sugar slinger reported "materially false" information in its March 23 and April 3 filings by saying that it was "operating sustainably" by shifting to pickup and delivery.

  • The restaurant chain's reality was a $6 million weekly burn and just four months of cash remaining.
  • It did allegedly share its financial troubles with prospective private equity investors and lenders, as it sought additional liquidity. The company on April 20 announced a $200 million preferred convertible investment from Roark Capital.
  • By the time of its SEC filings, Cheesecake Factory had already told landlords that it wouldn't pay its April rents.

In response, the Calabasas, California-based company agreed to pay a $125,000 penalty, without admitting guilt. That may be close to what it costs to order one of everything on Cheesecake Factory's massive menu.

Between the lines: This obviously reflects bad behavior by company execs, who tried to hide the deflated ball. But it also reflects the restaurant industry's dire condition, as COVID surges and Congress sputters on stimulus.

  • Cheesecake Factory reported $127 million of profits last year. This year, it reported $88.5 million of net loss through the first three quarters.
  • The company did manage to get a bailout from private equity, without receiving PPP monies, but that makes it a restaurant industry exception to the rule.

Go deeper

Mike Allen, author of AM
19 mins ago - Politics & Policy

Biden adviser Cedric Richmond sees first-term progress on reparations

Illustration: "Axios on HBO"

White House senior adviser Cedric Richmond told "Axios on HBO" that it's "doable" for President Biden to make first-term progress on breaking down barriers for people of color, while Congress studies reparations for slavery.

Why it matters: Biden said on the campaign trail that he supports creation of a commission to study and develop proposals for reparations — direct payments for African-Americans.

Cyber CEO: Next war will hit regular Americans online

Any future real-world conflict between the United States and an adversary like China or Russia will have direct impacts on regular Americans because of the risk of cyber attack, Kevin Mandia, CEO of cybersecurity company FireEye, tells "Axios on HBO."

What they're saying: "The next conflict where the gloves come off in cyber, the American citizen will be dragged into it, whether they want to be or not. Period."

Cedric Richmond: We won't wait on GOP for "insufficient" stimulus

Top Biden adviser Cedric Richmond told "Axios on HBO" the White House believes it has bipartisan support for a stimulus bill outside the Beltway.

  • "If our choice is to wait and go bipartisan with an insufficient package, we are not going to do that."

The big picture: The bill will likely undergo an overhaul in the Senate after House Democrats narrowly passed a stimulus bill this weekend, reports Axios' Kadia Goba.

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