By Pete Schroeder

The U.S. Securities and Exchange Commission said on Friday that Citadel Securities LLC, a Miami-based hedge fund, had agreed to pay $7 million to settle charges it incorrectly handled millions of orders and violated short-selling rules.

In a statement, the SEC said Citadel Securities over a five-year period had incorrectly marked millions of orders, denoting short sales as long sales and vice versa. It said those incorrect markings resulted from a coding error in the firm's automated trading system. The SEC said the firm also provided incorrect data to regulators during that time.

In a statement, a Citadel spokesperson said the error was identified and addressed by the firm more than three years ago.

“While updating our systems to accommodate certain client requests, we made a coding change that inadvertently affected a de minimis percentage of our order markings," the spokesperson said.

Without admitting or denying the charges, Citadel agreed to pay the penalty, as well as certify in writing the coding error has been addressed and to review its programming and coding logic.

(Reporting by Rami Ayyub, Pete Schroeder and Carolina Mandl; Editing by Kirsten Donovan)