The Securities and Exchange Commission also censured Athena Capital Research, which it said used a trading algorithm code-named "Gravy" to manipulate the closing prices of thousands of stocks on the Nasdaq market.
Athena placed a large number of rapid trades in the final two seconds of nearly every trading day over six months, the SEC said today.
Athena engaged in the manipulation between June and December 2009 and made up more than 70 percent of Nasdaq's total trading volume in the stocks involved in the final seconds of trading, the agency alleged.
New York-based Athena neither admitted nor denied the allegations under the settlement with the SEC, but it did agree to refrain from future violations of the securities laws.
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Censure brings the possibility of a stricter sanction if the alleged violation is repeated.
A series of market disruptions in recent years have heightened concerns about the impact of increasingly complex super-fast computers and algorithms, which now account for a majority of stock trading volume.
Regulators have put the trading systems under close scrutiny. Earlier this year SEC Chair Mary Jo White outlined new proposed rules that would, among other things, curb aggressive short-term trading tactics when the market is especially volatile.
The Dow Jones industrial average dropped 460 points in afternoon trading, all three U.S. Stock indexes were in negative territory for the year, and the so-called fear index spiked.
Although Athena is a relatively small firm, the SEC said it dominated the market in the final seconds of a trading day for stock that it normally traded only slightly.
"When high-frequency traders cross the line and engage in fraud, we will pursue them as we do with anyone who manipulates the markets," White said in a statement.