WASHINGTON—High-speed trading firm Tower Research Capital LLC agreed to pay $67 million to settle regulatory allegations that its traders manipulated the price of stock-index futures, the biggest penalty ever imposed by the U.S. derivatives watchdog in such a case.

New York-based Tower, which has been one of the most active participants in equity and derivatives markets, also signed a deferred-prosecution agreement with the Justice Department, which has worked closely with the Commodity Futures Trading Commission on such cases.

The misconduct alleged is known as “spoofing,” which involves entering phony orders that give other traders a false impression of supply and demand. The fake bids and offers are intended to push prices in a direction that favors the spoofer’s other orders.

The CFTC has filed or settled more than a dozen spoofing cases in the past year, with the Justice Department still pursuing some of those traders on criminal charges.

The resolution follows the guilty plea of two former traders at Tower who were involved in the scheme. Kamaldeep Gandhi and Krishna Mohan pleaded guilty to conspiracy to engage in wire fraud, commodities fraud and spoofing, while a grand jury indicted a third trader, Chinese citizen Yuchun “Bruce” Mao, on similar charges.