Paul Berliner, 32, formerly associated with Schottenfeld Group, agreed to settle the civil case without admitting or denying the allegations, the Securities and Exchange Commission said.

The SEC said Berliner would disgorge $26,129 in profits and interest, and pay a maximum penalty of $130,000. He is also barred from association with any broker or dealer.

Last November, Berliner spread a rumor that Blackstone would renegotiate its offer for ADS from $81.75 a share to $70 a share, the agency said.

The rumor, which Berliner spread through instant messages to other traders at brokerage firms and hedge funds, caused ADS shares to plummet 17%, from $77 to $63.65, in 30 minutes, the SEC said. The shares later recovered after ADS said the rumor was false.

Berliner, meanwhile, bet that ADS shares would fall by selling the company's shares short and profited from doing so, the agency said.

"The story disseminated by Mr. Berliner was a figment of his imagination," said Scott Friestad, associate director of the SEC's enforcement division. "Conduct like this is particularly insidious because it harms investors by distorting the information they use to make investment decisions."

Rick Schottenfeld, chairman of the New York-based firm, said "compliance is a top priority."

"There is no place at our firm for individuals who violate securities laws," he said, adding that Berliner was suspended in December.

ADS, a Dallas-based credit-card services provider, said it terminated the $6.5 billion deal with Blackstone, a New York-based private equity firm, earlier this month.

Contributing: Reuters

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