No offense, but you and your mother handled that terribly.
Yes, children that young know what sex is, talk about it, and even engage in it. Are they too young to fully grasp the consequences of it? Yes. But don't get caught up on the fact that your 11 year-old sister knows what sex is and talks about it with her peers. Of course she does.
But what you guys did here was take a moment that could have been used as a tool to educate her on the realities of sex, understand her and what's she going through with her peers better, and get closer to her in general, and used it to humiliate her and "tighten the reins" without making any attempt to understand her better.
Sometimes it's easy as parents (and older siblings) to just want to keep a child in a "child's place" because, ultimately, that what's easiest for us to do. But there are certain subjects, like sex, where I think it's best to approach young people as the young people they are, and not like the innocent children we want them to stay.