Federal prosecutors are trying to figure out whether there was criminal fraud in Goldman Sachs's mortgage trading business. It's unclear whether the investigation will lead to criminal charges.
The investigation is "centered on different evidence than the SEC's civil case," according to the WSJ, which broke the story late yesterday. But it's unclear what that evidence is, or which deals are being investigated.
"Given the recent focus on the firm, we're not surprised by the report of an inquiry," a Goldman spokesman said. "We would cooperate fully with any request for information."
The burden of proof is greater in a criminal case than in a civil case, and prosecutors have had a tough time making criminal charges stick in Wall Street cases (as evidenced by the acquittal last year of those Bear Stearns hedge fund managers).
As one lawyer said to Bloomberg News yesterday, "In order to proceed criminally in a case, you need to have very clear evidence of lying, cheating and stealing."