NEW YORK ( TheStreet) -- Financial stocks plummeted Friday after a court in Massachusetts rules that two foreclosures were invalid because the banks-- U.S. Bancorp ( USB) and Wells Fargo ( WFC) -- failed to show they held the mortgages at the time of the foreclosure.

The Financial Select Sector SPDR ( XLF) was down 23 cents at $16.14.

US Bancorp's stock slipped down 30 cents a share at $25.99 and Wells Fargo's stock's stock took a hit of $1.05 per share at $31.09.

Investors also retreated from banks that could face similar rulings such as JPMorgan Chase ( JPM), which was down $1.47 a share at $43.01and Bank of America ( BAC), down 26 cents a share at $14.18.

Bank of America's stock fell Thursday after the bank announced a plan to charge fees for checking accounts, which could help it break even in revenue after the Durbin Amendment is implemented, according to Susquehanna Financial Group David Hilder.

The biggest loser of the day though was Goldman Sachs ( GS), which is being sued by monoline insurer, ACA Financial for CDO damages related to ABACUS. Goldman's stock was down 1.62 at $170.49.

The big winner for the day was American International Group ( AIG), which was trading up $1.04 at $61.49 on news that the bank could sell $25 billion in stock to the public by March. The insurer is considering potential underwriters including Morgan Stanley ( MS), Bank of America and JPMorgan Chase.

--Written by Maria Woehr in New York.

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