(Reuters) - Goldman Sachs Group Inc will pay $7 million to resolve U.S. Securities and Exchange Commission charges stemming from a trading incident in which the Wall Street bank flooded the stock options market with erroneous orders.
The SEC said Goldman sent about 16,000 mispriced options orders to various exchanges on Aug. 20, 2013, leading to about 1.5 million options contracts, representing 150 million shares, being executed within minutes after the market opened.
By lacking proper safeguards, Goldman violated the "market access" rule that requires brokers and dealers to have risk and supervisory procedures designed to prevent market disruptions.
"Firms that have market access need to have proper controls in place to prevent technological errors from impacting trading," SEC enforcement chief Andrew Ceresney said. "Goldman's control environment was deficient in several ways, significantly disrupted the markets, and failed to meet the standard required of broker-dealers."
Goldman did not admit or deny the SEC's findings. It said it was pleased to settle, and has further strengthened its controls and procedures.
The SEC said the orders in question were placed for options on stocks and exchange-traded funds that had ticker symbols beginning with the letters I through K. Many errant trades were later canceled or received price adjustments, the SEC said.
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(Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama and Tom Brown)