After failed settlement talks, Virtu is bracing for an SEC lawsuit.

Following the failure of negotiations to resolve a disagreement regarding the company's trading data safeguards, Virtu Financial Inc.(NYSE:VIRT)  anticipates being sued by the Securities and Exchange Commission. In after hours trading, the shares declined.

According to a filing made by the New York-based wholesale brokerage on Friday, the agency had focused on its "information barriers policies and procedures" and had sent a Wells Notice indicating that a lawsuit was likely.

Following the announcement, the stock dropped by more than 4%.

Virtu stated that it had cooperated with the investigation, that it was unable to reach a settlement, and that it "intends to defend itself vigorously."

According to Virtu, "there is no evidence that anyone actually improperly accessed or used any client information, and our policies strictly forbid employees from doing so." The company also stated that it voluntarily informed the regulator about the problem three years ago, and that officials had found no evidence that data was improperly accessed.

The investigation is centered on who at Virtu had access to post-trade data from January 2018 to April 2019.