The big news on Friday was the Securities and Exchange Commission (SEC) announcement that Goldman Sachs (NYSE: GS) defrauded investors by failing to disclose conflicts of interest in collateralized debt obligations (CDOs) that it sold as the housing market was losing steam.

At the heart of the allegations is the fact the Goldman allowed Paulson & Company–one of its major hedge fund clients that was making bearish bets on the US housing market–to participating in selecting mortgage obligations that would ultimately find their way into bonds sold to investors. That’s a major blow to the Wall Street powerhouse’s reputation and is likely to give some of its institutional clients pause. Many are now wondering if they’re the sucker in the room.

More broadly speaking, they’re wondering if the Goldman charges are the opening salvo of a broad SEC inquiry into the practices of all of the investment banks at the height of the mortgage bubble. If it is, the reality of the situation is that it will likely find many more bad actors to pursue.

In response to the news, the S&P Financials Index sold off by about 4 percent and helped lead the broader indexes sharply lower. The timing of the announcement also stoked concerns that a comprehensive effort to create more robust industry regulation is gaining momentum.

Our regional bank ETF SPDR KBW Regional Banking (NYSE: KRE) sold off by more than 3 percent on the news, but this more of a Wall Street issue than a Main Street concern. The fund’s portfolio is free of financial outfits that feasted on subprime mortgages, only to sell them on to other investors.

In fact, many of the mid-sized regional financials held the mortgages on their own books. That created a great deal of pain for the banks in 2008 and most of last year, but most regionals are working through their credit issues and, in many cases, are seeing improvement in their loan portfolios. It also means they shouldn’t be targeted by what is likely to be a wide-ranging SEC probe of the industry, especially the big boys.

Wall Street’s woes amount to Main Street’s opportunity; continue buy the dip in SPDR KBW Regional Banking up to 31.