Investigations prompted by recent US Securities and Exchange Commission fraud charges

AIG is considering legal action against Goldman Sachs in relation to $2bn (£1.3bn) of collaterised debt obligations (CDOs) that it insured for the bank.

In a double blow for Goldman Sachs, the FSA said it would also be launching its own investigation into its investment banking activities.

AIG lost around $2bn on the CDOs, and could launch a private lawsuit or complain to the regulator if it is believed there has been wrongdoing.

AIG’s concerns are similar to those of the US Securities and Exchange Commission (SEC).

The SEC brought fraud charges against the Wall Street giant last week, alleging the investment bank sold mortgage-backed securities to clients, which one of its partners bet against. The SEC case has spurred the FSA into action, which will now launch its own probe.

The FSA said: "Following preliminary investigations, the FSA has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to recent [SEC] allegations. The FSA will be liaising closely with the SEC in this review.”

The insurance market is likely to be watching developments closely, as it could lead to a triggering of Goldman’s directors’ and officers’ insurance policies.

Goldman Sachs has denied it acted improperly.