The SEC has filed suit against Goldman Sachs, charging the firm with fraud in relation to the subprime mortgage crisis. Specifically, the SEC is alleging Goldman sold securities purposely designed to fail.
"The product was new and complex but the deception and conflicts are old and simple," said Robert Khuzami, Director of the Division of Enforcement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."
The charges relate specifically to the Abacus class securities. Here's extensive coverage by the New York Times: