Any probe by the Justice Department would be in a preliminary stage. No Goldman Sachs employees involved in the mortgage-related transactions that are the focus of the SEC case have been interviewed by Justice Department prosecutors or the FBI agents who often conduct probes on behalf of prosecutors, according to a source familiar with the matter. The sources spoke on condition of anonymity because they were not authorized to discuss the matter publicly.

The Justice Department usually investigates high-profile cases of securities fraud, but the threshold from criminal prosecution is significantly higher than that of civil cases. The SEC only files civil cases.

The Wall Street Journal and Bloomberg News reported Thursday night that the U.S. Attorney's Office in Manhattan had followed up on the request and opened a criminal probe. The office declined to comment.

"Given the recent focus on the firm, we're not surprised by the report of an inquiry," said Goldman spokesman Lucas Van Praag. "We would cooperate fully with any request for information."

It is very rare for the government to indict a firm, and the mere threat of criminal prosecution can destroy a company. A criminal investigation destroyed the infamous Wall Street firm Drexel Burnham Lambert in the 1980s even though the firm settled with authorities.

And although the Supreme Court ultimately overturned the conviction, accounting firm Arthur Andersen collapsed after facing criminal charges in connection with the Enron corporate corruption in the early 2002.

In that case, the justices said that lower courts had given juries far too broad principles by which to decide whether to convict the company. The decision, lawyers at the time said, would make it more difficult for prosecutors to bring criminal cases against corporations.

The SEC claims the firm and an employee named Fabrice Tourre broke the law and committed fraud when they sold clients a complex investment linked to the value of home loans that was secretly designed to fail. Another firm, Paulson & Co., a hedge fund, helped Goldman create the investment and planned to bet against it. But the SEC claims that relationship was not disclosed to Goldman's clients, ACA Financial Guaranty and the German bank IKB.

Goldman has steadfastly rejected charges that it committed securities fraud. Tourre has also denied the charges. Goldman says ACA and IKB were sophisticated investors and disclosure of Paulson's role was not legally required.

Proving a criminal case could be challenging given that prosecutors must show "beyond a reasonable doubt" that Goldman and its employees committed fraud, compared to the threshold for a civil case, which only requires a "preponderance of evidence."

Under civil law, the SEC doesn't have to prove Goldman set out to defraud investors -- only that it did. But criminal law would require that prosecutors show that Goldman maliciously planned to mislead its investors.

Since the SEC filed its lawsuit earlier this month, securities lawyers have debated the merits of the agency's case, with most agreeing that it represents an ambitious legal theory that big financial firms that knew they were engaging in speculative betting on home loans were defrauded because Paulson's role was not disclosed.

Goldman also says ACA was told about Paulson''s role, and the firm has written a letter to its investors strongly suggesting that was the case.

The Justice Department suffered a setback earlier this year when a case against two Bear Stearns hedge fund managers failed. A jury rejected securities fraud charges against the hedge fund managers, who ran funds linked to subprime mortgages, after presenting evidence that the men knew about risks in the market but didn't disclose these to investors.

The SEC is still pursuing the Bear Stearns case.