Two units of Bank of America's brokerage arm Merrill Lynch agreed to pay $11 million and admitted they violated certain federal rules by using inaccurate data for short sale orders, U.S. regulators said on Monday.

A Bank of American spokesman said in a statement the brokerage has since "taken steps to improve our internal controls related to execution of short sales."

The Securities and Exchange Commission's case against Merrill Lynch centers on a rule known as Regulation SHO, which governs short sale transactions.

Short selling involves the sale of borrowed securities. Typically, customers will ask their brokers to help locate stock available for short sales and brokers prepare so-called "easy-to-borrow" lists.

The SEC said that some of the stock Merrill placed on the list later became no longer easily available for borrowing. Although staff at the brokerage stopped using the lists, the SEC said the trade execution platforms were still programmed to process short sale orders using the outdated information.

The SEC also said that the flaw in Merrill's system caused it to use data that was more than 24 hours old.

Merrill began implementing new systems to correct the problem after the SEC began investigating, the agency added.

As part of the settlement, Merrill is also required to retain an independent compliance consultant.