Citigroup Inc., Goldman Sachs Group Inc. and eight other securities firms were fined $43.5 million by FINRA who said the companies presented favorable stock research in hopes of winning underwriting business in an initial public offering by Toys “R” Us Inc.
The overall fines are assumed to be the largest in a single case since the 2003 research settlement that barred research analysts from participating in IPO pitches.
FINRA fined the following firms.
- Barclays Capital Inc. – $5 million
- Citigroup Global Markets Inc. – $ 5million
- Credit Suisse Securities (USA), LLC – $5 million
- Goldman, Sachs & Co. – $5 million
- JP Morgan Securities LLC – $5 million
- Deutsche Bank Securities Inc. – $4 million
- Merrill Lynch, Pierce, Fenner & Smith Inc. – $4 million
- Morgan Stanley & Co., LLC – $4 million
- Wells Fargo Securities, LLC – $4 million
- Needham & Company LLC – $2.5 million
FINRA Executive Vice President, Regulatory Operations, Susan Axelrod, said, “FINRA’s research analyst conflict of interest rules make clear that firms may not use research analysts or the promise of offering favorable research to win investment banking business. Each of these firms used their analyst to solicit investment banking business from Toys”R”Us and offered favorable research. This settlement affirms our commitment to policing the boundaries between research and investment banking to ensure that research is not improperly influenced.”