NEW YORK (CNNMoney.com) -- Goldman Sachs' legal headaches don't start and end with the Securities and Exchange Commission.
Reports surfaced late Thursday that federal prosecutors have opened a criminal investigation into Goldman and its employees, over whether it may have committed securities fraud in its mortgage trading operations.
A representative for the firm would not confirm reports of an inquiry, but said they were not surprised given the scrutiny the firm has endured in recent weeks, adding they would cooperate with any requests for information.
The latest legal action builds on the high-profile civil case brought against the company last month by the SEC, in which the agency charged the firm and one of its employees with defrauding investors in the sale of securities tied to subprime mortgages.
In many ways, the agency's case has become a game changer for Goldman. Not only has it tarnished the gilded reputation of Wall Street's top firm, it also exposed the company to series of new legal attacks across a number of fronts.
Since the SEC announcement, top German and British officials, including UK Prime Minister Gordon Brown, have demanded investigations into the firm's dealings, opening the door to additional regulatory probes.
And even some state law enforcement officials have hinted that they too may join the Goldman Sachs pile-on, capitalizing on the public distaste for big banks and Wall Street in general.
Richard Blumenthal, Connecticut's attorney general, said recently that he is already looking into the SEC's allegations, potentially setting the stage for a formal state investigation.
There's also the possibility that individual investors who were burned by the now infamous "Abacus" mortgage security that's at the heart of the SEC probe may also sue Goldman.
"Some of the investors who lost money might try to go after them," said Tom Hazen, a securities law professor at the University of North Carolina.
The only concrete legal action taken so far however, has been on behalf of a handful of individual shareholders. Those complaints have alleged that the company simply fell down on the job, failing to be transparent with investors in "Abacus" as well as with its own shareholders about the potential charges it faced from the SEC.
Goldman acknowledged some of those legal woes in a securities filing Monday, adding that it expects to face other suits and investigations in the future related to the sale of complex mortgage investments called collateralized debt obligations, or CDOs.
Experts suggest the company could also soon come under fire as pension funds and other activist investors cry foul over the drop in the company's stock.
Shares of Goldman (GS, Fortune 500) have plunged 21% since the SEC first revealed its fraud allegations, including a 9% drop on Friday as news of the federal criminal probe prompted a pair of analysts to cut their rating on the firm.
"There are any number of large institutional investors looking at a possible class action against Goldman based upon recent disclosures and the recent stock drop," said Thomas Dubbs, a senior partner with Labaton Sucharow, a law firm that specializes in securities litigation cases.
The Goldman spokesman said the company would not comment on the current lawsuits filed against it or about the possibility of more legal action.
All along, analysts and legal experts have contended that the actual dollars the company might have to spend defending itself against such claims is quite manageable for Goldman, a firm with famously deep pockets.
Some estimates have placed the cost of the SEC claim at $700 million or more, over the next couple years. While no small sum for some firms, that's mere pennies for a company that is expected to bring in about $11 billion in revenue each quarter through the remainder of this year and into 2011.
Even before the SEC's bombshell announcement on April 16, Goldman attorneys were already bracing for a busy 2010.
"Our litigation expenses can be expected to remain high," the company wrote in its latest annual report.
Goldman was already involved in a number of cases that seemed much more minor in comparison to its current headaches.
For example, Goldman and 20 of its peers have been engaged in a long-standing battle with the city of Cleveland for allegedly creating a "public nuisance" after securitizing subprime mortgages that are now tied to foreclosed, and in some instances, abandoned homes.
In March, a former female vice-president at Goldman filed a discrimination suit against the firm, alleging Goldman engaged in "mommy tracking", or sending her to a lesser position after her first pregnancy and ultimately firing her while on maternity leave with her second child.
Despite all those headaches, experts assert that Goldman's biggest threat is not how much it may have to pay in legal settlements. Instead, it is the potential impact the whole affair will have on its reputation, client relationships and worker morale.
"Needless to say, this is highly challenging for us to quantify," Credit Suisse analyst Howard Chen, who tracks the firm, wrote in a note to clients earlier this month.
Maybe that's why investors are so nervous.
Who watches the watchers? It's an age-old question, but police across the country may have a new answer. More