By Chelsey Dulaney
The Financial Industry Regulatory Authority said Thursday that
it has fined 10 firms, including Barclays Capital Inc. and Goldman,
Sachs & Co., a total of $43.5 million for offering favorable
coverage of Toys"R"Us's failed 2010 initial public offering to
secure a spot as underwriters on the offering.
The fines range from $2.5 million for Needham & Company LLC
to $5 million on Citigroup Global Markets Inc. Credit Suisse
Securities (USA), LLC; J.P. Morgan Securities LLC; Deutsche Bank
Securities Inc.; Merrill Lynch, Pierce, Fenner & Smith Inc.;
Morgan Stanley & Co., LLC; and Wells Fargo Securities, LLC were
also fined.
Finra said that in April 2010, Toys"R"Us invited the 10 firms to
compete for a role in its planned IPO. The company in May 2010
disclosed plans to raise up to $800 million in new shares.
Toys"R"Us asked the analysts to make presentations to management
in an effort to ensure that the analysts' views on issues such as
valuation factors aligned with the firms' investment bankers, Finra
said. Some of the analysts voiced a positive outlook on Toys"R"Us
and its potential IPO during their presentations, Finra said.
Toys"R"Us offered the 10 firms roles in the IPO, but didn't end
up proceeding with the offering.
Finra also said that Barclays, Citigroup, Credit Suisse, Goldman
Sachs, J.P. Morgan and Needham didn't have adequate procedures in
place for research analyst participation in investment banking
pitches.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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