Wall Street in subprime trouble again

NEW YORK (CNNMoney.com) -- Just when Wall Street thought it had put its subprime troubles behind it.

The Securities and Exchange Commission's fraud suit against Goldman Sachs is likely just the first of many subprime-related charges the agency will bring against Wall Street firms, experts said.

"Given the sweep of problems that came out of the financial crisis, the broad swath of institutions involved and the level of losses and anger, you would think there would be additional actions forthcoming," said Susan Chaplinsky, professor at the University of Virginia's Darden School of Business.

The SEC said Friday its investigation into the subprime meltdown is not yet over.

'"We continue to examine structured products that played a role in the financial crisis," said Robert Khuzami, the agency's division of enforcement director.

Wall Street has finally begun to re-emerge from the subprime debacle that began in 2007 and ultimately cost Bear Stearns and Lehman Brothers their lives and other firms billions in losses. Banks are reporting profits once again as the mortgage market slowly stabilizes.

But a newly emboldened SEC may not be so quick to let things lie. Wall Street watchers say that Goldman Sachs was likely not the only one participating in questionable deals.

The SEC said Friday it charged Goldman (GS, Fortune 500) and a company vice president, Fabrice Tourre, for their failure to disclose conflicts in a 2007 sale of securities tied to subprime mortgages. The civil fraud suit alleges that Goldman allowed a hedge fund betting on the subprime collapse to help select securities later sold to other investors.

One thing is for certain -- Friday's action marks a new phase for the SEC. The agency, along with other regulators, has been hammered for allowing financial firms to run wild during the housing boom.

"It's a sign of a new and tougher enforcement style at the SEC," said John Coffee, professor at Columbia Law School who specializes in securities regulation.

By aiming its opening shot Goldman Sachs, a storied Wall Street firm with close ties to the Washington D.C., the SEC is dispensing any notion that the investment banks have special protections.

"It's counter to the buzz that they have been indulging the big boys," said Alan Bromberg, securities law professor at Southern Methodist University, adding the agency is trying to rehabilitate its reputation.

But it's the reputation of the Wall Street firms that is once again being called into question. A lingering fallout of the subprime crisis is the public perception that bankers and traders will go to any extreme to make a buck.

"Business has resumed, but trust hasn't been restored," Chaplinsky said.