The Securities and Exchange Commission's internal watchdog said the timing of a fraud lawsuit against Goldman Sachs filed by the SEC was "suspicious," suggesting agency officials tried to distract attention from a report criticising the SEC for failing to detect a Ponzi scheme.

Republican lawmakers asked SEC Inspector General H. David Kotz earlier this year to investigate how the SEC decided to file its April suit against Goldman, which settled the case in July for $550m. The federal lawsuit alleged wrongdoing in a sale of mortgage securities called Abacus 2007 AC-1, and was filed as Senate Democrats were taking up the financial-regulation bill.