Financial Services Authority has triggered an investigation on Goldman Sachs for $1bn (£650m) fraud charges.

The embattled Wall Street firm has denied such allegations and it has said that the actions were "entirely appropriate" and it would "vigorously contest" the matter.

The firm stressed that they have lost $90 million on the transaction, known as Abacus 2007-ACI. It also added that its clients were professional investors and had appropriate experience in the complex financial instruments they were buying.

As per the FSA, they are investigating the circumstances of the case, and if they find anything inappropriate, actions would be taken.

The firm believed that the charges were baseless and politically motivated. It has come at the time when President Obama is working on cleanup of the US banking industry through some legislative changes.

Experts believe that these investigations would lead to other suits as the Dutch bank Rabobank accused Merrill Lynch for similar practices while selling it a CDO.