FINRA Fines Ten Banks Over Toys ‘R’ Us IPO Conduct


The Financial Industry Regulatory Authority is fining 10 banks a total of $43.5 million, saying they tried to win roles in the initial public offering of Toys ‘R’ Us by offering the company favorable analyst coverage.

FINRA says the banks violated its conflict-of-interest rules by telling the company their analysts would write favorable reports about Toys ‘R’ Us if they were named as underwriters of the offering. The toy retailer filed for an IPO in 2010 but ultimately did not go public.

The agency says the companies consented to its findings but did not admit or deny the allegations.

“Each of these firms used their analyst to solicit investment-banking business from Toys ‘R’ Us and offered favorable research” to the company, said Susan Axelrod of FINRA.

Eight of the banks that were fined were listed as underwriters of the Toys ‘R’ Us IPO.

Barclays PLC, Citigroup Inc., Credit Suisse Group AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. were each fined $5 million. Deutsche Bank AG, Bank of America Corp., Morgan Stanley and Wells Fargo & Co. were each fined $4 million, and Needham & Co. was fined $2.5 million.

Citigroup said it is pleased to have resolved the issue. JPMorgan Chase, Goldman Sachs, Bank of America, Credit Suisse, Deutsche Bank, Morgan Stanley, Needham, Barclays and Wells Fargo declined to comment.