US stocks slumped on Friday as investment powerhouse Goldman Sachs was charged with defrauding investors by US regulators, capping an otherwise positive week for the major indices.
The Securities and Exchange Commission (SEC) filed a civil suit in New York alleging that Goldman Sachs colluded with a hedge fund client to make money out of the sub-prime housing market. Investors lost 1 billion dollars as a result, the SEC alleged.
It marked the first government lawsuit related to Wall Street practices that precipitated the near collapse of the entire financial sector in October 2008.
Goldman strongly denied the charges, but couldn't stop its stock price from plunging more than 13 per cent in New York trading, dragging down all financial stocks by an average of more than 3 per cent.