NEW YORK — The New York Stock Exchange is set to cancel a series of erroneous trades in U.S. Bancorp, after its preferred shares were issued at a fraction of their intended value for three days last month.

Shares of the bank's shares of Series A preferred stock, introduced in a share swap, were first listed on June 11 and trading began on June 16 around $79 per share, instead of their market value closer to $800, according to documents filed by the stock exchange with the Securities and Exchange Commission. Shares continued trading at the incorrect levels until June 18, when exchange staff learned of the mistake and halted trading.

It wasn't immediately clear where the source of the error lies, but the confusion casts further unfavorable light on the handling of erroneous trades by regulators.

The stock exchange initially refused to cancel the trades, following discussions with regulators. Its unusual reversal comes less than three months after the May 6 "flash crash" prompted exchanges to break more than 15,000 trades, angering investors left in precarious positions. The stock exchange has since set limits on market orders designed to prevent erroneous trades, but the mix-up in the U.S. Bancorp shares seems to have originated when more shares were allocated than the bank intended.

"We know that there was a problem with the allocation of those shares in connection with the settlement process," said Teri Charest, spokeswoman for U.S. Bancorp, one of the largest U.S. banks, in an email Wednesday.

The Depository Trust & Clearing Corporation, which settles and clears all U.S. equity trades, said it made no mistakes when allocating the number of shares. Because the DTCC holds in custody 90% of U.S. securities, the agency processes all required corporate actions, including stock swaps.

"We followed correctly the instructions we were given by the exchange agent and the transfer agent," said DTCC spokesman Steve Letzler.

Deutsche Bank Securities, the lead dealer manager for the swap, did not return a call for comment. U.S. Bancorp Investments acted as the co-dealer.

The stock exchange said all trades in the bank's depositary shares executed on June 16, 17 and 18 would be considered broken because the trading prices "were not reasonably related to the market value of such shares," according to an NYSE statement late Tuesday. Reuters first reported the issue Tuesday night.

The exchange had said last Friday that after "extensive consultation with the related regulatory authorities," the trades would stand.

The SEC declined comment. The New York Stock Exchange declined to comment beyond its statement. The share price fell far below its intended value because a significantly larger number of shares were allocated than the 547,622 shares that were supposed to be issued, according to regulatory filings from June 10. The depositary shares traded around $79 for three days, until the trading halt on June 18.

Trading in the shares will resume Friday, the exchange said.

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