Goldman Sachs Winners & Losers

While big name Goldman clients such as Ford (F), Rite Aid (RAD), and Macy's (M) likely won't be affected, the bank's competitors could be. That's because those corporate clients mainly use Goldman's services to manage their investments and their credit facilities -- neither of which should be impacted by an investigation that's focusing on solely CDOs.

Wall Street has been abuzz for a while now about the possibility that the SEC will step up its focus on financial lawbreakers from the last few years. For its part, Citigroup (C) has already distanced itself from Goldman, saying that it had nothing to do with the suit and was focused on "responsible finance."

>> Who Owns Citigroup?: Prince Al-Waleed

But Citi could be next on the government's hit list: The SEC has been investigating the banking giant's handling of subprime loans since 2007, something that management tried to avoid talking about during Monday's earnings call. While strong earnings performance this week was analysts' main focus, a more detailed look at Citi's situation could yield some interesting analyst reports in the coming months.

And Citi's far from alone in that regard. Scores of other financial firms are currently being investigated by the SEC on their use of subprime investments, and others could easily take a tumble on news of enforcement action.

Among them are Bank of America (BAC) and Wells Fargo (WFC), two of the biggest subprime lenders during Wall Street's period of "irrational exuberance." Both Wells and BofA -- including its Merrill subsidiary -- had extensive experience not only lending to subprime consumer credit risks but also packaging CDOs to the institutional investment world. As a result, the companies are likely to see increased scrutiny from regulators and investors alike.

With corporate events for both companies planned before the end of April (Wells reported today), analysts should get the chance to grill management on their potential involvement in SEC enforcement action.

>> Who Owns Wells Fargo?: David Dreman

Investor anxiety over financials has already spilled over into the market as credit default swap spreads for the banking sector ballooned following Friday's announcement. Although some investors will be tempted by ETFs such as the ProShares Short Financials (SEF), betting on that fund in the middle of an earnings-induced rally seems a bit too risky.

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