(Adds details of allegations and market access rule, byline)
By Jonathan Stempel
June 30 (Reuters) - Goldman Sachs Group Inc will pay $7 million to resolve U.S. Securities and Exchange Commission charges stemming from a programming error that caused the stock options market to be flooded with erroneous orders, roiling traders and prices.
Tuesday's settlement, in which Goldman did not admit wrongdoing, arose from an Aug. 20, 2013 incident that was among a series of high-profile mishaps, including the 2010 "flash crash," linked to computers.
The SEC said Goldman mistakenly sent about 16,000 mispriced options orders to various exchanges.
It said this caused about 1.5 million options contracts, representing 150 million shares, to be executed within minutes after markets opened, though Goldman tried to cancel the orders.
The SEC said the problem was compounded when an employee in Goldman's "Mission Control" unit, which monitored the bank's trading systems, manually lifted circuit breakers designed to block errant orders, believing he had authority and because no one objected.
Goldman was charged with violating the SEC's "market access" rule, which requires brokerages that provide customers with direct market access to have reasonable risk and supervisory controls designed to prevent 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."
In a statement, Goldman said it was pleased to settle, and has strengthened its controls and procedures.
The market access rule was adopted after the May 6, 2010 "flash crash" in which computer activity caused the Dow Jones Industrial Average to briefly plunge more than 1,000 points, wiping out nearly $1 trillion of market value.
A London-based high-frequency trader, Navinder Singh Sarao, was in April criminally charged over his alleged role in that case.
The SEC said the Goldman orders in question were placed for options on stocks and exchange-traded funds with ticker symbols beginning with the letters I through K.
It said Goldman lost $38 million from the incident, and could have lost $500 million had many trades not later been canceled or received price adjustments under options exchanges' rules governing "clearly erroneous" trades.
Last November, Wedbush Securities agreed to pay $2.44 million and admit wrongdoing to settle SEC charges it violated the market access rule by improperly allowing thousands of "essentially anonymous" overseas traders to access U.S. markets. (Reporting by Jonathan Stempel in New York; Additional reporting by Sarah N. Lynch in Washington, D.C.; Editing by Chizu Nomiyama and Tom Brown)