Another fine for Goldman

    Is a big British shoe about to drop on the Goldman Sachs rally?

    The Financial Times reports the U.K.'s Financial Services Authority could assess a big fine on the up-and-down investment bank as soon as Thursday, concluding a five-month-long probe of Goldman's (GS) business practices.

    The fine could approach the $49 million penalty the FSA slapped on JPMorgan Chase (JPM) this year for running afoul of the prohibition on mixing client funds. A fine of that size wouldn't mean much to Goldman financially but would be the latest black eye for the firm and could put up a detour in the stock's latest attempt to scratch back lost ground.

    Update: The BBC reports the fine is 20 million pounds, or $31 million. "The fine is for failing to tell the FSA it was under investigation for fraud by the US financial watchdog this summer," the BBC says. Goldman declined to comment.

    The U.K. regulator's probe was announced just days after the Securities and Exchange Commission sued Goldman for its handling of a 2007 sale of subprime debt. Goldman ended up settling that case for $550 million and admitting its disclosures had been incomplete.

    The FSA seems to have no jurisdiction in that case, widely known as Abacus after the name of the collateralized debt obligation the firm sold for the benefit of hedge fund manager John Paulson. He ended up making $1 billion on the deal, and investors in the CDO including a bailed-out German bank ended up losing their entire investments.

    But the FT notes that the FSA has indicated the Abacus case raised larger concerns about how Goldman treats its customers, and it is on these practices that the fine supposedly will be based.

    People familiar with the fine that will be levied on the bank by the FSA say that it is not based specifically on the Abacus transaction, but is the result of its investigation into the bank's business practices in London sparked by the SEC allegations.

    The report comes at a bit of a sensitive time for the stock, which has rallied repeatedly over the past year only to be slapped down by the latest bubble era hangover.

    Goldman shares are up 9% this month, supported by reports out Wednesday that the firm's proprietary traders could be picked up by the likes of KKR. Fans like the idea of Goldman washing its hands of the prop desk because it would show the firm is moving quickly to comply with new regulations, potentially giving it an advantage on less nimble rivals.

    But it may be a bit before that bet pays off. Even with Wednesday's rally, Goldman stock trades 20% below its level the morning the SEC announced the Abacus suit.