WASHINGTON—A former senior trader at Goldman Sachs Group Inc. has agreed to pay a $400,000 fine to settle civil charges he misled the bank’s customers when selling them residential mortgage-backed securities at inflated prices.

The Securities and Exchange Commission said Edwin Chin, the former trader, misled customers about the price at which Goldman purchased the securities and how much the bank would make by arranging the deals—in some cases inaccurately saying the bank was selling bonds at cost and that he wouldn’t be compensated...