By Telis Demos And Alexandra Scaggs 

Citigroup Inc., Goldman Sachs Group Inc. and eight other securities firms were fined a total of $43.5 million by regulators who said the companies offered favorable stock research in hopes of winning underwriting business in an initial public offering by Toys "R" Us Inc.

The overall fines are believed to be among the biggest in a single case since the 2003 research settlement that barred research analysts from participating in IPO pitches because of potential conflicts of interest. The Financial Industry Regulatory Authority said analysts at the 10 firms became part of the sales pitch when Toys "R" Us and its owners interviewed investment bankers in 2010.

"I so want the bank to get this deal!" one Citigroup analyst wrote to a supervisor before meeting with Toys "R" Us and some of its owners, which include private-equity firms Bain Capital, KKR & Co., and Vornado Realty Trust, regulators said Thursday.

An analyst at Needham & Co. wrote in an email: "I would crawl on broken glass dragging my exposed junk to get this deal." He added in another email: "My whole life is about posturing for the Toys R Us IPO."

Regulators didn't release the names of anyone tied to the alleged wrongdoing. The Citigroup analyst was Kate McShane, according to a person familiar with the matter. The New York company declined to make her available for comment. The name of the Needham analyst couldn't be determined.

The stock-underwriting process has long been vulnerable to potential conflicts of interest. Underwriting initial public offerings is lucrative for securities firms, but companies want analysts at those firms to help push the shares higher by recommending them after the IPO.

The pressure has grown even more intense as private-equity firms look to cash out on their stakes in closely held companies. Private-equity owners often seek to vet the opinions of investment banks' analysts before picking underwriters, according to people involved in the process.

At Toys "R" Us, the securities firms "all wanted to get this deal, and you had fairly aggressive [private-equity owners]. And it was during a tough deal market, when there weren't a lot of other deals to be had," said Susan Axelrod, executive vice president for regulatory operations at Finra.

Toys "R" Us didn't go through with its IPO. Finra officials suggested that the alleged behavior during the retailer's planned stock offering was extreme but said they would monitor future deals for similar conflicts of interest.

"The rules are clear, and they apply to the banks," said J. Bradley Bennett, executive vice president for enforcement at Finra. "There's no doubt on whom the obligation falls." Under the current rules, Finra officials said Thursday, securities firms can't allow analysts to be part of the IPO pitching process, including the use of "templates" with their views of a company's prospects, as the banks did with Toys "R" Us.

Toys "R" Us told some investment banks that the purpose of the template was to protect the retailer from being "burned" by an analyst's decision to take a negative view on the stock later, the regulator concluded.

Vornado and Toys "R" Us didn't respond to requests for comment. KKR declined to comment. A Bain spokesman said the firm was looking into the matter but didn't comment further.

Richard Truesdell, co-head of law firm Davis Polk & Wardwell LLP's capital-markets group, said the fines will spark "a big change in how things are going to be done." He tells clients that are working on potential IPOs to "interview the analysts...and that's not going to be able to continue."

Finra began looking at Toys "R" Us following a referral from the Securities and Exchange Commission's enforcement division, Finra officials said. The securities firms "neither admitted nor denied the charges, but consented to the entry of Finra's findings." Seven of the 10 firms fined Thursday together had paid more than $1 billion in combined fines as part of the 2003 research settlement.

As part of Thursday's settlement, Barclays, Citigroup, Credit Suisse Group AG, Goldman and J.P. Morgan Chase & Co. each agreed to pay $5 million. Deutsche Bank AG, Bank of America Corp., Morgan Stanley and Wells Fargo & Co. each paid $4 million, and Needham paid $2.5 million.

Finra said Needham didn't provide a valuation to Toys "R" Us that reflected its analyst's views. Barclays, Citigroup, Credit Suisse, Goldman, J.P. Morgan and Needham were also cited for failing to supervise their analysts.

All 10 of the firms except for Barclays and Morgan Stanley were chosen as underwriters by Toys "R" Us.

In one email cited by Finra, a Goldman analyst told Toys "R" Us that he was "extremely excited" and "appreciate[d their] time," according to Finra. The analyst was Matt Fassler, people familiar with the matter said. Goldman declined to make him available for comment.

According to Finra, a Goldman investment banker emailed a colleague that he wanted bankers to be "tightly coordinated" with the analyst who was presenting to Toys "R" Us, and that the analyst would be "an advantage for us."

Investment bankers at Citigroup told Toys "R" Us's owners in an email that they could "count on Citi's firmwide support and advocacy for the Toys story and valuation," regulators said. Credit Suisse told the retailer: "Our firm has approached this process in complete alignment, having pursued a vigorous vetting process before our meeting...amongst banking, equity capital markets and research."

Write to Telis Demos at telis.demos@wsj.com and Alexandra Scaggs at alexandra.scaggs@wsj.com

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