BARCLAYS may be forced to ask the US authorities for more time to look into allegations it misled investors using its dark pool trading platform, City A.M. understands.
The British bank was accused last month of telling clients the private trading facility was safe from predatory operators like high frequency traders – but it is alleged it then also promoted the system to those traders.
The New York attorney general’s allegations are thought to have come as a surprise to the bank, and it is investigating internally to decide how to respond to the claims.
Barclays was given 30 days to respond to the claims, giving it a deadline of 25 July – this Friday.
But it may have to request additional time to look into the claims, to enable it to respond properly to the law suit.
The bank immediately hired US law firm Wilmer Cutler Pickering Hale and Dorr to investigate the claims.
The internal probe is expected to include lawyers studying the marketing claims made by the bank in presentations to clients, and comparing them with the actual data from activity in the dark pool.
Individual emails presented in the attorney general’s filings will also be trawled through for evidence of any wrongdoing.
Barclays declined to comment ahead of any formal response to the claims.
At the time the claims were published, chief executive Antony Jenkins promised “a full internal investigation into these allegations, which will report directly to me.”
Goldman Sachs was fined $800,000 (£468,000) at the start of July for failing to ensure its dark pool customers received the best price on their trades.
Dark pools are designed to limit the amount of information available on transactions, relative to public exchanges. As a result traders can keep major deals quiet, stopping prices moving against them.
However, this has also led to claims that customers are ripped off as they cannot see as much information.