Stephen Foley: Goldman Sachs's $550m settlement won't make all of its problems go away

US Outlook: If Goldman Sachs and the rest of Wall Street think the vampire squid's settlement of fraud charges marks the beginning of the end of their credit crisis woes, they are mistaken.

Certainly there was much for Goldman to be relieved about in its $550m (£358m) deal with the Securities and Exchange Commission, and who can argue with the pop in its share price when the news emerged?

But let's not forget that the settlement is only less bad than feared. Figures of $1bn had been bandied around, so the biggest penalty in the SEC's history actually came across looking rather small. The number was inevitably going to be small relative to Goldman's profits – the bank will make back that $550m in 14 days – but it has raised the bar for Wall Street punishments. And quite right too.

Remember what was happening in early 2007 when Goldman constructed its ill-fated Abacus mortgage derivative out of ropey US home loans, many chosen by hedge fund manager John Paulson so he could stack the odds in favour of his bet against Abacus. Across Wall Street there was a frenzied effort to package up and sell off as many toxic mortgages as possible, in advance of what most traders thought would be either a pause or a decline in activity, and which the most astute realised would be a crash.

This was the bigger conspiracy of which Goldman was a part, of which the brightest on Wall Street are always a part: hawking bad investments to stupid investors.

The SEC has found no laws against that, but it does insist on a level playing field when it comes to the disclosure of information. At the heart of these apparently technical issues of what goes into a prospectus for a complex financial product, there is a simple question. Is someone being misled?

That is why the size of the penalty extracted from Goldman is less important, to my mind, than the fact that the SEC also won an admission of wrongdoing. Such an admission is anathema to the bank, and almost unprecedented in these types of settlements.

Without agreeing that it amounts to fraud, Goldman has accepted the meat of the SEC's case, copping to having made incomplete disclosures. It has paid a fraud-sized penalty for the "mistake" of keeping its less lucrative European clients in the dark about the exact nature of an investment that it cooked up in cahoots with a favoured hedge fund client.

The wording of Goldman's admission was careful not to open up new legal space for the criminal investigation believed to be under way or for challenges from elsewhere. America's army of politically minded attorneys-general were the ones who ultimately extracted the most from Wall Street over the dot.com debacle a decade ago. They will certainly not be put off by the settlement, and could be emboldened in their investigations of the industry now. The same goes for the massing ranks of lawyers working to recoup losses suffered by the supposedly "sophisticated" investors who were stuffed with toxic mortgage derivatives. For Goldman, as for the rest of the banks involved in this discredited area of high finance, the reckoning is not over.