U.S. Said to Open Criminal Inquiry Into Goldman

Federal prosecutors have opened an investigation into trading at Goldman Sachs, raising the possibility of criminal charges against the Wall Street giant, according to people familiar with the matter.

While the investigation is still in a preliminary stage, the move could escalate the legal troubles swirling around Goldman.

The Securities and Exchange Commission, which two weeks ago filed a civil fraud suit against Goldman, referred its investigation to prosecutors for the Southern District of New York, which has now opened its own inquiry.

Goldman has vigorously denied the accusations by the S.E.C., which accused Goldman of defrauding investors involved a complex mortgage deal known as Abacus 2007-AC1.

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Synopsis: Federal prosecutors are now investigating the Goldman case to see if there are grounds for criminal charges. Stakes would be high for both Goldman and the US Attorney’s Office investigating the case if criminal charges were indeed filed. While Goldman cannot risk more damage to its company’s reputation, the attorney’s office would be haunted by the reminder of the failed prosecution of two former Bear Stern’s traders last fall.

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