The Financial Services Authority (FSA), Britain's financial watchdog, said Tuesday it has started an investigation of investment bank Goldman Sachs after the U.S. Securities and Exchange Commission charged the Wall Street giant with fraud.

"Following preliminary investigations the FSA has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to recent SEC allegations," the agency said in a statement.

Meanwhile, the FSA said it would work closely with the SEC on the investigation.

The SEC on Friday charged Goldman Sachs with "defrauding investors" over subprime mortgage securities, which were largely blamed for the worst financial crisis since the Great Depression.

Prime Minister Gordon Brown said Sunday that he wanted the FSA to investigate Goldman Sachs after it was charged with fraud by U.S. regulators.

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