Goldman Sachs Group Inc. agreed to pay a $7 million fine to settle regulatory claims that it sent thousands of mistaken orders that roiled the U.S. options market almost two years ago.
The bank didn’t have adequate safeguards to prevent its computers from placing about 16,000 mispriced options orders on Aug. 20, 2013, the U.S. Securities and Exchange Commission said in a statement Tuesday. This led to about 1.5 million contracts trading at the beginning of that day’s session, before many of the transactions were later canceled.
“Goldman’s control environment was deficient in several ways, significantly disrupted the markets and failed to meet the standard required of broker-dealers under the market access rule,” Andrew Ceresney, the director of the SEC’s Enforcement Division, said in the statement.
The incident shook confidence in financial markets, though it was overshadowed two days later when an error at Nasdaq OMX Group Inc. shut much of the U.S. stock market for hours. Both breakdowns spurred the SEC to demand that trading firms and exchanges improve their systems to prevent catastrophes.
Goldman Sachs neither admitted to nor denied the regulator’s allegations.