It has been reported that Federal prosecutors have undertaken a criminal investigation to determine whether Goldman Sachs Group Inc. or its employees committed securities fraud associated with its mortgage trading.

The investigation has been undertaken by the Manhattan U. S. Attorney's Office. It is supposed to be in the preliminary stage at present. The investigation was triggered by a referral by Securities and Exchange Commission.

The SEC had level civil securities-fraud charges against the firm. However, Goldman and the trader reveal that they are innocent and that they are battling these civil charges.

Prosecutors haven't decided whether they include these charges in the case.

According to reports, these criminal investigations have increased the stakes for the firm, which till date has been Wall Street's most powerful firm. It is believed that the investigation is also focused on evidence which is not in keeping with the SEC's civil case.

Both, the Manhattan U. S. Attorney's office and Goldman Sachs have refused to comment on the issue.

The news of the investigation had an immediate impact on the company's performance in the stock market. Goldman shares plummeted 2.6% in after-hours trading to $156.08. At market closing, they again rose to 2.1%