Financial regulators in the United States have accused the investment bank, Goldman Sachs, of fraud relating to the collapse of the US housing market in 2007.
The Securities & Exchange Commission is taking civil action against the bank, saying it failed to inform customers that one of its own clients was betting against the success of sub-prime mortgage investments that he helped devise.
The claims concern the bank's marketing of sub-prime mortgage investments just as the US housing market faltered.
Goldman Sachs rejected the allegations, saying that it would "vigorously" defend its reputation.
Goldman shares sank $US24.92, or 13.5%, to $US159.35 in afternoon trading, on the New York Stock Exchange, after earlier falling to $US155.57.
The SEC charges are expected to fuel anti-Wall Street sentiment in Congress, where financial industry reforms are being drafted in the Senate.