NEW YORK ( TheStreet)-- The Securities and Exchange Commission's internal watchdog has launched an investigation into the timing of the agency's settlement of its civil fraud case against Goldman Sachs ( GS) last week.

The SEC's Office of Inspector General, which is headed by H. David Kotz, is probing the issue at the request of Rep. Darrell Issa (R, Calif.), according to a July 22 letter from Kotz to Issa obtained by TheStreet. The investigation was first reported by CNBC.

As I pointed out here, the timing of both the announcement of the fraud charges and the settlement seemed to be closely coordinated with President Obama's push for financial reform legislation.

Issa raised similar concerns in a July 22 letter to Kotz and in a July 16 letter to SEC Chairman Mary Schapiro. In the letter to Kotz, Issa also argues the SEC settled the case with Goldman "to avoid further criticism in the press." The letter states that settling a case on such grounds "is explicitly prohibited in regulations governing the Commission's behavior."

Goldman shares were changing hands at $146.37, shortly before the closing bell, a decline of 0.42%. The stock had traded higher for most of day, but dove shortly after the CNBC report appeared, briefly sinking as low as $144.16.

-- Written by Dan Freed in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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