Goldman Sachs does not have E&O cover

The source added that the bank does buy some D&O insurance, but because it does not cover potential fines or court cases as a result of a battle with the SEC, any loss to the market would not be direct.

He added: "I am not aware that any lawyers that are embroiled yet but there will be some."

"There will be other banks involved through similar actions but thankfully exposure to Wall Street banks is fairly limited across the industry."

On Friday the SEC accused Goldman of fraud after the investment bank put together a subprime mortgage investment package that lost two of its German clients $1bn, accusing it of holding short positions without telling the investors.

Goldman - which has also said that the charges were "completely unfounded in law and fact" - said that it lost $90m on the investment, while only earning back fees of $15m. The news sent US stocks tumbling on Friday, fuelling fees of another market correction, but the Dow Jones Industrial Average gained back half of what they lost on Monday with a 50 point rebound.

Goldman were unavailable for comment.