catalyst for a market correction? we will breakdown the charts for you and the goldman scandal. which stocks could be under pressure as well as a result of the charges? and later the financials are hit very, very hard today, but should you be shifting your money away from financials and into another sector? we have answers for you coming up. we want to go to scott cohen who has the latest on the s.e.c. charges against goldman sachs. scott? >> well, trish, goldman sachs was founded in 1869, a bastion of the financial world, and we can take a look at the headquarters in lower manhattan of a company now under fire, often a lightning rod and never more so than today. the securities and exchange commission filing civil fraud charges against goldman sachs as well as one of its vice presidents involving mortgage-backed securities. the s.e.c. says that goldman structured a portfolio of what turned out the to be toxic mortgages hand picked by a hedge fund manager run by john

paulson. and the s.e.c. says that goldman did not disclose that paulson not only had picked the mortgages, but that he was betting against those mortgages in 2007 as the housing market was about to come undone. goldman sachs today says it will vigorously fight the charges and work to restore its reputation, a reputation that today is very much under fire. here is the s.e.c. chief of enforcement speaking today in new orleans. >> there is a fundamental difference between somebody being short on a synthetic cdings o or taking a view that the assets will perform poorly and a world of difference between thoo and letting that person being involved in the selection process of the portfolio. >> that person being john paulson of john paulson and company, the big hedge fund company and more to the point, the concern is that investors were not made aware of that and it is a disclosure issue. it is securities fraud.

also charged here in this case is fabres teuri is quoted in an e-mail saying that the building meaning the market is about to come crumbling down. trish? >> well, right now it is time for the closing bell on the stock exchange. we have my co-host for the hour, bob pisani, and sharon epperson and david faber joining us from new orleans and also in the conversation is steven wood with rus selling investments and todd shownberger managing director with a coleman trading. so full group indeed. let me start with you steven. what is the fallout, and are investors overreacting? >> well, the markets are roll till for a while and the volatility has pared down for the last couple of months, but long term, investors want to

look at the strategic view and what it means to the portfolio. so asset allocation that is properly diversified takes into account shocks like these, and the market will be volatile around this news, but longer term, i won't change my view on how the markets will perform, and the portfolios that we have got. i think they strategic asset allocation is the best way to deal with the short-term volatility. >> would you include financial services in that strategic allocation if it were you? >> i would look at strategic financials and stay away from some of to banks. when you look at bank of america, and jpmorgans and even goldman sachs right now, i think that they may be, the right opportunity to put some money into those areas. >> well, let me ask you about, that because the fear is of course that it may not be just goldman who is going to be hit with this, but you could have other institutions as well, and consequently, they are all trading off. you see this though as a buying

opportunity? explain? >> well, no question, trish. this is a company one quarter ago reported $9.5 billion in net revenue and now earnings coming out tuesday and no question that goldman should report in the eight-digit range. so if i were a buyer and looking at the recent history right now and the stocks in the quarterly earning patterns, i am saying that goldman is a great opportunity if they can be wiped out on the earning numbers. >> it is bob pisani, and i want to know about the whole fear factor in the market, because outside of financials and the material stocks and commodities down, this is not a rippling move to the downside in my opinion. are there broader implications here that investors should be more concerned about at this point? >> well, bob, you hit the nail on the head. this is really illustrates how fragile this so-called bull market really is. just a couple of weeks ago we had comments from thomas hoenig who sent the markets down triple-digits and now today, this is almost like a breather

for traders to go out to start selling right now. so, i'm thinking it is a knee-jerk reaction and short-term, and goldman, this is a serious charge, but ultimately the company will survive and be a good investment down the road. >> and the commodities needed a reason to sell today and we were lower and looking like lower on the week, but the fact that goldman sachs is the largest brokerage firm in the commodities sector is something that a lot of folks paid close attention to, and add to that the fact that paulson and company is a big trader when it comes to the commodities as well and particularly have made big bets on gold recently, and so we saw the sell-off accelerate in the gold market once the news came out, and now we are looking at the gold prices down nearly $25 today. >> let me go over the david faber at a major m&a conference in new orleans. david, what are you hearing among the folks, all of whom work in the financial sector? >> well, you know, this morning there were about 200 m&a attorneys here who learned the

goldman news at the same time we all did, and surely people are interested in it. being lawyers, they are all wondering about the facts of the case and how long it will take. some questioning why it is that goldman chose perhaps not to settle if there was an opportunity to do so, so, a lot of questions from that perspective, trish, that we all share. of course, we did also just coincidence have robert kazumi the head of the enforcement of the s.e.c. to talk to some of the lawyers and had an opportunity to talk to him. not a lot of answers beyond the come plant though at this point, because there were not a lot of differences of how this transaction differed from the what was the synthetic cdo market, and is the s.e.c. looking at all of the things occurring in the market and we will see more charges for the larger firms down the road. >> well, that is the question, because on the call with the s.e.c., they got asked that

exact question, and they did not comment. a lot of people are speculating as to who will be next. and the industry as a whole lost $25.9 billion, and goldman made up $841 billion of that. >> well, i want to respond to david's question, because i have been trading and polling who else might have been involved? and david, it seems fewer trading clients out there doing this, so might the damage be fairly limited at this point? >> well, we will see. deutsche bank was a big player. >> they are down 9%, yeah. >> and right. and we know that. there were a few others. as you well know, this ended up being a fairly large market and in fact the largest cdo market in the '06, '07 time market was synthetics and not made up of the actual mortgages but of a fantasy football play where one side said this player will do

well and the other side said we don't think so. that so-called bet that went on and packaged by such by goldman sachs as a placement agent here. and the so-called manager, they are all gone. the guys who bought the bank and got to bermuda and you can't get them, they are all out of business. so in a sense, they had only the placement agent to go after in the form of goldman sachs. >> stephen wood, what does it mean to the goldman business model, if you ren gaug are enga goldman and you are buying the products, are you continuing to engage with them or what is the effect? >> well, that is something i can't gauge and kapt comment specifically on goldman, but it is tough to gauge. longer term, i think that it is going to iron up, and i'm not convinced as broad a contagion effect within the financials generally. in terms of my money in terms of being a market strategist, i think other issues longer term

that is more important such as the move that china is making are far more impactful on the portfolios and greece and the debt risk which is a multi-year issue, and there are issues that inhave ves -- investors need toe into account. >> well, we are in the here and now. and in the equity market, rick santelli is with the cme group in chicago. rick? >> well, trish, there is probably going to be a whole lot more information coming out this weekend and a lot of traders on one side of the camp i have been dealing with say, hey, the market is acting really well, and yes, the interest rates went down, and i would like to say that dollar was not effected and the trading went down, but a lot of to traders don't jump on this being over this quickly, because sometimes when you open a door,

you can't stop what comes through. there could be more cases and more details, but i think that caution is the watch word and just because the moves are large today, it doesn't mean monday there are not more facts on the table. particularly, watch the table which is void of correlation with the goldman headlines today. trish, back to you. >> well, according to rick santelli, it could be a pandora's box. we have less than 45 minutes before the closing bell. we have market trading down, but off of the lows of the day. the dow still 11,000 there and down 114 points and 11,429 and nasdaq lower as well. now the kotick, tick by tick and we will see if the fall in financials could trigger elsewhere? and also, following the s.e.c. charges should you buy, sell or hold in goldman sachs. and also, in the new york stock

exchange, it is citi in the lead of the actives. you are watching cnbc, and we are first in business worldwide.

welcome back. news of the s.e.c. charging goldman sachs with fraud related to mortgage backed securities sending shock waves across wall street, and news playing on the equities showing resiliency off of the worst news of the day on stocks. and we got a remind over the controversy over subprime mortgages. so the question is what is next for wall street? and joining me is jake who is covering this angle for a long time, and he will tell us what his angle is on the goldman news down the road. and what is interesting to me is not that the traders were coming out to attack or defending goldman, but a lot of them felt political motivations were in play here, and we have a huge bill a financial regulatory bill

coming on and maybe voted on two weeks from now, and maybe this san attempt to influence some people who have been sitting on the fence. do you believe there is any truth to that at all? >> well, one of the things that the prosecution underscores is that we still don't know what happened in 2006 and 2007 and obviously policy makers are trying to figure out remedies for problems that occurred in the period. they need to know better what happened, and so this might shed some light in that direction. >> one thing that is interesting to me is the whole role of the collateral manager there, the aca company out, there and supposedly they were checking it, but the allegation is that it was paulson that was actually picking it. is there any sense this has happened before or that the z.c. is going to be tougher now looking at the role of the asset managers, the allocation managers? >> good question, bob. we know that the s.e.c. is looking at the collateral managers and have been for at least six months if not longer. these were supposed to be

independent operating institutions, and they had a fiduciary duty to the cdo and picking the collateral and a story that a colleague and i did on hedge fund magnitar did what is similar to the goldman sachs case, they did use collateral managers and it appears they leaned on the collateral managers to pick particular assets, so i believe this is an ongoing issue. >> and interesting to say that, because you in other words think there are other incidents like this one, and could this potentially be a pandora's box as rick santelli was eluding to? >> well, it has that possibility. the one we looked at, a number of the leading banks did similar things to goldman in they structured the deals. >> jake, hold on, and don't go away, because i want to go to scott cohen on the break news desk. what have we got? >> senate banking chairman chris

dodd weighing in, saying that the s.e.c. lawsuit against goldman sachs is serious and he won't comment on ongoing litigation, but he said, be clear we don't need the outcome of the case to know the opaque nature of the allocations were causing wall street to game the system, and he continues to call for financial reform. so chris dodd is weighing in as the politics are starting to heat up. >> certainly politics is a part of it, and don't forget that goldman sachs is easy pickings, and they have been the poster child for the mainstream media in terms of big bad goldman, so this is only going to add to that i would imagine. >> and here is senator shelby's comment on the goldman situation. if the s.e.c. finds fraud or anything else, they should throw the book at them and anyone else who breaks the law. and this should affect the financial regulatory reform --

there you go, what we were talking about. and also, david faber was talking about how deutsche bank was also a big hold oreer of th cdos. >> well, with the same equity firm, they worked with ubs and merrill and citi and deutsche, and all of the main banks and it seems like these banks and the cdo managers knew that this is what magnitar was doing. >> i urge you to go on the website to look at the research they did on them. it is interesting reading. >> and now kotick, tick by tick, and there is concern that the goldman could be the catalyst for wall street. here is what the technicals are saying and what we should be watching for next week is jordan kotick, global head of strategy with barclays capital. jordan, good to see you, and what are the technicals telling you right now? >> certainly volatility in the

market. there are two things coming off of the charts that will mean something for the financial sector. number one, the u.s. financial sector, the first thing to notice is that thefinancials is that it is not outperforming, but performing with the market. you have had a rally in the financials of 25 off of the low. there is not a technician out there who doesn't feel it needs a correction, but distinguish between correction and collapse. we don't believe it is a collapse. we will look at a correction before the market turns to the upside. it needed a catalyst and now it has the catalyst for a q2 correction. >> what are you sighing with the phi nan 1458s in euro s halls i what that means here? >> well, to be specific, what to watch next week to see if there is contagions. well, the financials in europe and unlike the u.s., they have been underperforming the broad market and not done as nearly as well as the financials have done

in the u.s. so number one, we want to watch to see if the financials in europe start to turn from sideways to the downside. is there contagion? and two, are we going to see the move of underperformance continuing. so we have to watch the u.s. correction and see what kind of fallout is happening in the european market. >> thank you, jordan kotick. we have 40 minutes before the closing bell, and we have a market trading lower down 119 now on the dow, and the nasdaq is lower as well, and the finances are taking the brunt of it leading with the goldman sachs and citi today, but goldman with the story. >> well, off of the lows, an goldman is well off of the lows. and should we be paying at a tension to other related stocks who could be paying bearish concern, and more tonight at 7:00 with erin burnett and simon

hobbs tonight on "fraud on the street" that is tonight at 7:00 p.m. eastern time.

okay. welcome back, everyone. we want to take a look here at

some widely held stocks and looking at the big financials and citi seeing the downside there down 4.37%, and bank of america down 4.7%. some are widely held for you, and general electric trading down almost 3%, our parent of this network. exxon, pfizer, and at&t and verizon really the only one out there in positive territory with the widely helds that we have there on the screen. anyway, we have the s.e.c. fraud charges against goldman sachs having major ripple effects on the market today. for an investor perspective on what is exactly next, we are now turning to the cnbc investor network, cnbc contributor and professor of school of business, peter navarro. peter, good to see you. give us your reaction to the goldman sachs story? >> well, the dodd bill went from a 50-50 gamble to a near certainty in terms of passage.

i think that that's bearish for the markets. in terms of bob's conspiracy theory, i think that there is quite a bit to that. but i think that we will have the dodd bill no question about it. >> okay. the timing on this, you also say is suspect, and something that art kasian mentioned to me as the news broke that the timing is something to take a look at. but, timing or not, i mean, the reality is that the implication is that we are probably goi ingo see more activity on the regulation froonnt, peter. >> yes, this is what troubles me. john paulson and if the allegations are true, he did everything wrong as bernie madoff and jeff skilling did, because it is irreprehensible with the billion dollar screw job to go in and manipulate the deal, and the investors get really stripped of their wealth. i mean, that is crazy. and the point i think is that if

he didn't get charged, then people are going to say, yeah, we really need more regulation so that we can ensnare people like him as well. >> well, i guess that the question is, isn't it his prerogative to be in a vehicle and then perhaps later choose to get out, but maybe goldman is at fault here for not letting investors know that he had gotten out? >> no, i think that is the wrong read, trish. from what i gather from the coverage here, paulson's hedge fund basically went into a deal, and it created a third party to disguise the activities and then basically stuck a bunch of really bad cdos in the deal, knew that it would fail, and took a huge short position, and made out like a bandit. that is not -- people call it tsh >> well, that is not good. >> it is more than corrupt. >> let's talk about the implications for the investors, because one of the big questions that everyone is debating is whether or not this is going to

be contained to simply goldman or are there many other banks hit with similar charges from the s.e.c.? what is your take, peter? >> well, the central problem facing the country for several years now is credit and liquidity problem, and to the extent that investors are weary of going in and providing funds to our markets, that doesn't help our situation of the economy right now. so, i think that from the regulatory point of view, the dodd bill is bearish, and from the liquidity and credit point of view to the sense that investor sentiment has really been taken a hammer to is not good for this. and we will see how it plays out. remember that washington mutual came out with a sill lar level of corruption in the mortgage market, and we cannot live in a country that has this kind of activity going on where a few of the corrupt people are making a ton of money and bringing the whole house down. >> peter navarro, thank you so

much. we appreciate your perspective and of course, cnbc has extensive coverage of the case against goldman sachs, and including the complete text of the s.e.c. complaint against the firm, so you can go online to cnbc.com and check it out. it is really something that complaint to read. >> it is. half an hour to go before the closing bell, and we were down 168 points on the dow, and we are also seeing that weakening here as we head into the close. same situation the nasdaq still up for the week a bit i believe, trish. >> still to come on the "closing bell," forget the financials, our next guest says that there is another sector to cash in on the wake of the goldman scandal. plus, we will take a closer look at the fallout of the financials and what it means for your investments and could today's sell-off be the start of a real correction? we have answers for you that you do not want to miss. we will be right back.

welcome back. less than 30 minutes to go before the closing bell. here is how the markets are shaping up.

it is the financials and the american express and the bank of america and the jpmorgans and some of the commodity names like alcoa weighing on the stocks here and we are below the lows, but not that far off. we were down 170 points at one point, but nasdaq is the same situation off of the lows and that is about the break even for the week. the s&p 500 as well. sitting below 1,200 at six points. time for the "fast money," and wall street has been under pressure on the news that s.e.c. has filed fraud charges against goldman sachs. what is the "fast money" trade? and how do you play the news? you know jon najarian from option monster.com, and a cnbc contributor, and jon, anything that had to do with cdos is to the downside. the rating agencies for example, and mew oodies to the downside,d do you think it is necessarily fair and i know you are not into the policy side of things to

paint a broad tar brush against the rating agencies at this point. >> well, i do, bob, because of this, when you look at what happened here, and of course, the firms that put together the cdos pretty much knew what the game was and they knew they needed high value mortgages up on top to basically offset the very high default rate mortgages that were down below, and they gamed the system, if you will, by doing that. and then the ratings agencies looked at this and blessed wit a aaa rating, so that is what michael lewis talks about in his book, and certainly how a lot of the guys made a lot of money, so that hit the rating agencies in 2008 and 2009, and they were recovering from it, but today's action says that if goldman sachs went to, for instance, moody's s&p and this is alleged the complaint that goldman allegedly said a third party, a neutral third party put this

security together and then these guys blessed it not knowing that it was john paulson, obviously, that is bad for goldman, but also bad for those guys, because they really didn't research it very far. >> and how would they have known if it was an active effort to conceal this that paulson was in fact the person who put this together? how would they have understood that? >> right. >> moody's i mean. >> well, the answer is that moody's should have at least asked the question. who was this neutral third party who put this together for you? that is an obvious question if you say, we didn't put this thing together and we didn't structure just to game the system and let somebody have a great downside play on the housing market. we had a neutral third party put it together, and the natural question that you and i would ask, bob, who was the third party? and then if you find out it is a hedge fund manager, you are a little more concerned that it might be a little tainted, and not quite as much of a neutral third party. >> well, jon, you will certainly find that the roles of the collateral managers is going to come under a large degree of

scrutiny at this point. let me ask you about deutsche bank and david faber and i were talking about deutsche bank actively involved in the cdo market and they are down 9% today, and obviously the traders are concerned a little bit as well. >> yes, an unless they have a similar smoking gun with another hedge fund manager, most probably not john paulson, quite frankly, but another hedge fund manager, and again, they had to have hidden the information, because goldman is alleged to have said, this is a third party that put this together, and then the third party bet against it immediately in the case of john paulson. i doubt that deutsche bank or bank america, merrill, or citigroup has such a smoking gun in their closet. if they don't, they are being unfairly tarred with this move. >> thank you, jon. always a pleasure to see you. tonight on "fast money" and optionsactio

optionsactionsstrategy.com. the dow was down as much as 170 points earlier. but, guess what? we are only down 107. okay. so well off of the lows. nasdaq, also, in the red. >> and the damage really is financials and materials, but the commodities dropped and they never really recovered on that. up next, we will breakdown what the goldman fraud charges will have on the outlook of brokerage stocks. and later we will debate whether this news could derail the market rally and send stocks tumbling into a market correction.

and welcome back. goldman sachs shares falling sharply following the s.e.c.'s fraud charges, but how are the rest of the brokers trading? matt nesto takes a look. >> well, thank you, bob. it is pretty complicated if you look at the intraday comparison and i used the broker dealer index which is not the best, but it is a good one. if you take a look at it, you will see that you are down, better than two to one, versus the 1.4% decline we are seeing for s&p 500. if you take a look at exactly how that plays out in terms of what this fallout means, goldman sachs has lost about, well, 10 to $12 billion in market cap. the mayhem in midtown as you can

see is focused. look at the deutsche bank which is interesting, because of the ranking on the lead tables for these cdos if you will. they were one of the biggest issuers of them, a not that there is any correlation of them there, but they are taking a harder hit than most of the other investment banks. if you pull away from wall street though, check it out. look at raymond james based down in florida a modest hit, and stifel no hit at all, and piper jaffray, and down, and obviously charles schwab the broker down, and on the almost eve of goldman's earnings, and citigroup called it a black eye, but not a life threatening event. they point out with the fact that the government went with the civil charges as opposed to criminal charges as evidence that they had insufficient

evidence to go with criminal case. and oppenheim ser ter is the ob official downgrade, because they said it would be good if goldman sachs gets charge and they are curious with many people not only with the timing of the charges, but they also say that the s.e.c.'s agenda looks a little bit and smells a little bit like it is driven by public sentiment. ubs says that the uninvestable label is back and potential for more lawsuits and shareholder lawsuits ash and the new york attorney, and the loss of banks or pension funds and momentum for the regulatory debate in high gear right now, and they point to the increased public ire. so bad day all around for markets, and especially gs, goldman sachs. >> yes, you can say that again, matt nesto. we want to expand on the issue of how to goldman news actually impacts stocks in the broader financial sector, in other words, what does it mean for

investors, and how do they know where to put their money the work right now? for that we have bill griner with us right now. how are you doing? >> just fine, how are you? >> and also, mr. nesto is still with us. so bill, what are you saying? are you reluctant to be in the sector or are there some buying opportunities given the downside we have seen today throughout the financial sector? >> well, we have been underweight in aur exposure in the financial sector in general now for quite some period of time, and our concern is not really one of focusing on the balance sheets and those kinds of issues in the financial sector, but more of industry consolidation, and normally when an industry is consolidating like this one is being forced and marched into an industry consolidation, you are into the environment where the industry's profit margins are under a lot of pressure. and with that in mind, we have kept our clients underexposed on the domestic side of the equation to financials now for quite some period of time and we are not changing that one way or another. >> and matt nesto, we have certainly seen a huge sell off

today, and you mentioned it earlier, goldman has lost about $10 billion worth of market cap, and $44 billion within the financial sector lost today alone, and some of the guys that i have talked to down here on the floor say, you know, it could be a buying opportunity. what are you hearing? >> well, you know, we are not seeing it and the market is down. when that buying opportunity materializes, we will see it in the marketplace. one other thing that if we can go one further, $44 billion the decline give or take in the financial sector, and that is equivalent to bristol-myers just being evaporated, and the total of the s&p 500 has lost $175 billion all because of, well, this news that was out there today. we shouldn't say all because of, and that is not fair, because the markets were weak before this came out. but certainly, it is a big giveback in every single stock in the financial index, and s and p are all down, and some

noticeably and inconspicuously less, and maybe that is the buying opportunity. >> so, bill, what do you think that goldman will do come monday? >> i don't know to be frank. i can speculate as to what is going on in the market overalthough. there is a kind of tinge here and a taste of the market participants refocusing on balance, the nation's balance sheet, and that is roughly to say that financial leverage, and financial issues, and that is what the market focused on until about last march, but the previous two years before that -- >> how does that relate to goldman? is there any play for investors right now given the goldman news? how do you react if you are given the financial space? >> stay with quality is what you have to do. >> well, people would have said that goldman was the best qua quality you could get? >> well, companies less levered than goldman. look at the balance sheets and stay with companies that have a capital base of at least 15 to 20% of the overall asset base,

and look at those kinds of organizations. >> well, trish, the board i showed earlier before this piece with the regional firms, and the raymond james and stifle out in st. louis, and piper jaffray and those firms do a lot of business and of course always making the case of the anti-wall street theme playing very well right now, so, i am sure that their sales forces are going to be fired up by this. >> fired up indeed. matt nesto and bill griner, thank you so much. here we are closing in on the last 15 minutes or 12 minutes here. and before the "closing bell" -- my goodness, it is down 92 after having been down 170. >> we are about break even. and the s&p 500 is almost exactly at break even. >> which is a good place to be considering. hang on real quick, because we want to go over to scott cohen at the breaking news desk for more. >> well, trish, a lot of people are speculating about the timing of the major s.e.c. lawsuit against goldman sachs and it comes in the midst of the debate

of financial reform and the same day as a particularly scathing inspector general's report came out this afternoon that says that the s.e.c. knew about the stanford ponzi scheme as far back as 1997. well, the s.e.c. is telling us that all of this is coincidence and everything proceeded on its own trajectory, and the stanford report was ready for release today, and the goldman suit was ready for today and the issues in congress had nothing to do with it, so the s.e.c. denying that there was anything cute about the timing of this lawsuit, and they filed it when it was ready. guys? >> all right. scott, thank you very much. the big question now, should we be buying goldman on the sell-off? or are things going to get worse for the financial giant? and don't forget that tonight, you don't want to miss the cnbc special on the goldman scandal with erin burnett and simon hobbs outside of the headquarters of goldman sachs to look at the financial and legal implications of the actions and what it means for your money coming up tonight at 7:00 p.m.

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welcome back, everyone. take a look there at the most widely held stocks and see how that ri fairing today. you can see alcoa off 2.5%.

walmart is up 11 cents and gaining .02%. and hear how the techs are trading, and we want to share the technologies and the nasdaq losing ground today and microsoft trading down .04% and intel off 1%, and ibm is the bright spot, but it is moving to the flatline. and we are coming right back with the closing countdown. >> and the war on wall street, and we will breakdown if politics were behind the news to charge goldman sachs with fraud. that is minutes away. we are cnbc first in business worldwide. es two jobs... at onc. one: kills weeds to the root. two: forms a barrier, preventing new ones for up to four months. roundup extended control.

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okay. welcome back, everyone. we are certain i will seeing some resilience from the traders and a dow off 120 points, but we want to point out it was down 170 earlier in the session, so a little bit of a comeback there as we head into the final moments. bob pisani is with me here on the floor of the new york stock exchange. >> quite a day. >> it has been quite a day. ? we want to point out here that while the dow was down 170 points at one point, largely the damage was confined largely to what was going on in the financials and the material stock. we want to bring in rick

santelli, and simon hobbs and talk to them a little bit about what is going on. simon, can you give us your take on that from the other side of the bonds per happens? >> well, if you look at the trading screen, they are red at the moment and clearly an indication that people pulled risk off of the table. well, we are resilient and the financials are down only just over 3%. if you are dicey with that just to the extent to which your fund manager may or may not have gotten out of goldman in time, which was a clever pick as far as a lot of people were concerned, but the long and short of it is that we have regained ground, and this is still a market in nine weeks is up over 13% on the s&p. even with the sell-off today and we ultimately appear to have held our own and i think that is really the take away. and we have trouble with goldman, and we will talk about

it on the special with erin burnett tonight, and some rake over, but the market held up reasonably well. >> it did, but however, one of the big questions now is what we will see coming up next week. i want to bring in rick santelli, and you were talking earlier rick, and i paraphrased you a bit saying it is a pandora's box scenario that people are very much afraid of, in other words, where there is smoke there is fire, and now that we have seen this with goldman, the question is, are there going to be others who become problems down the road? >> well, absolutely. let's be very simple about it and oversimplify. as the special branch of the s.e.c. doing this kind of corporate structured deal starts to dissect it, they will end up with more on the selection process of the securities and how they worked with the rating agencies to get the widest spread and how is normal for an issuer to hold the long side of say a junior traunch and maybe be short some of the senior

traunches. i think that there is a process of enlightenment which may make the net wider for other potential investigations, and simon, what about overseas? are we going the see a goldman type in the same type of situation in a corporate finance structured deal with a foreign entity? is that possible? >> i think that the it was based in london. and there was no doubt that this is going to encourage tighter financial regulation on capitol hill. absolutely no doubt. and paulson on derivatives which is a huge profit stream for wall street, and they will get those i suspect going through regular platforms and of course, $40 billion to wall street every year is going to hit earnings for some of the players, but overall, it is still going to be about the american economy coming back, and the growth that we are seeing in asian. that is what will propel the stock markets. >> well, rick, how much of a

contagion? the number of big players involved in the cdos seems to be fairly small. i notice that some of the other ones outside of deutsche bank, the other international players are only down 2% to 3%, and might is this be limited to few people if at all or just to goldman sachs? >> well, aagree, bob. the problem i have is that i have seen the confidence of the environment we are in starting to fix itself a bit, and i think that, you know, whatever fairy dust holds the markets together and gives it liquidity, that psychological aspect could be damaged by what i perceive to be a long ongoing investigation with lots of nasty headlines potentially. >> all right. the important thing here, and we are closing out the week, and trish, the dow jones industrial average basically flat for the week. the s&p 500 may be down .01%, and the big win ser the nner fo is the nasdaq down 1% there. is the closing bell, and you know who is next, trish regan.

it is 4:00 p.m. on wall street, do you know where your money is? welcome to the "closing bell," i'm trish regan in for the maria bartiromo, and despite news that shocked wall street investors are digging in their heels here and showing a bit of resistance, and you have the dow losing as much as 170 points earlier in the session after the s.e.c. charged goldman sachs with fraud. related to subprime mortgage investments and the latest details we will have for you coming up momentarily, but stocks ending off of the worst levels of the day. we want to look at how the dow finished today on wall street. you can see down 124 and we want to reiterate it was down 170 points earlier in the session. the nasdaq composite ending off of 2,481, and the s&p 500 down 19. and goldman sachs also off of their lows, but the stock is still sharply lower ending off

12.6%. you can see it right there, $160.97 a shafrmt nre. now, ahead this hour, how the news will impact investors and how lit impact your money. will it spark a sell-off and kill the rally? we will have answers for you in a moment. plus, we will look at how the charges against goldman could change the legal land scape on wall street, and late ter war on wall street and debate the timing, because the timing was interesting here, and the timing of the charges had anything to do with the push for financial reform on capitol hill. in the meantime, bobble pisani right now our eye on the floor of the new york stock exchange, and bob, a lot of the roughly $10 billion in market cap for goldman and $44 billion for the entire sector and we managed to eke out a tiny gain at least, flat for the week. >> and one thing that is very hard to figure out is how much of this is clearly due to the fact that the market was overbought and has been for weeks on end, and it is what is coon