A spokesman for the German government, Ulrich Wilhelm told newspaper Welt am Sonntag that the government was taking legal steps against Wall Street's most powerful bank.

"The German regulator BaFin will file a request for information with the US Securities and Exchange Commission," Wilhelm said.

The US Securities and Exchange Commission (SEC) this week charged Goldman Sachs and one of its vice presidents, Fabrice Tourre, for defrauding investors by misstating and omitting key facts.

The commission alleges the global investment firm sold mortgage investments without telling buyers they were partially crafted by investors who were betting they would fail.

Millions of euros

The deal, which took place during the subprime mortgage crisis of 2007, was said to have cost investors around 740 million euros ($1billion).

Buyers included the German state-owned KfW development bank and the German bank IKB Deutsche Industriebank, which had to be bailed out by taxpayers after it lost nearly 111 million euros according to the indictment.

IKB spokeswoman Annette Littmann told AP that the bank is aware of the charges filed by the SEC, but declined to comment.

Goldman has defended itself against the allegations, and claims that it lost 66 million euro ($90 million) from its own investment in the security.

"We are disappointed that the SEC would bring this action related to a single transaction in the face of an extensive record which establishes that the accusations are unfounded in law and fact," the company said in a statement.

smh/dpa/Reuters/AP
Editor: Sonia Phalnikar