It's been a tough year for major financial institutions -- witness the recent headlines from Morgan Stanley (NYSE:MWD) and Citigroup (NYSE:C).

Now another player is getting some flak: Goldman Sachs (NYSE:GS). Why? Look at one of its recent IPO deals, Lazard (NYSE:LAZ), a legendary investment bank with roots going back more than 150 years. But when Lazard hired a well-known outsider, Bruce Wasserstein, the firm's founding family, led by Michel David-Weill, decided to cash out with an IPO.

Pulling this off would have been no easy feat. After all, much of Lazard's revenue comes from the volatile mergers & acquisitions (M&A) business. There are already signs that the M&A market is cooling off, especially in light of the difficulties in the junk-bond market -- rising interest rates and costs, plus downgrades in mammoth auto manufacturers Ford and GM.

But this was no problem for Wasserstein; after all, his nickname is "Bid 'Em Up Bruce." He did just that by convincing Goldman to IPO Lazard at $25 per share on May 5. That was nearly 28 times 2004 earnings. Keep in mind that Goldman has a P/E of about 12.

Now Lazard's stock is languishing at $21.65, down about 17% since it started trading. Interestingly enough, Goldman aggressively bought Lazard stock in the aftermarket -- owning about 10% of the outstanding shares. But it was all for naught, and Goldman sustained a loss of roughly $15 million before giving up.

This IPO doesn't appear to be an isolated event. Goldman was the lead underwriter for six 2005 IPOs; four are currently underwater. For example, FTD Group (NYSE:FTD) is down 17.9% and OptionsXpressHoldings (NASDAQ:OXPS) is down 18.8%. So far this year, shares of Goldman-led IPOs have fallen an average of 10.8%.

With almost one-fourth of Goldman's investment banking revenue coming from share offerings, some on Wall Street are wondering: Is the company placing its clients' interests above those of investors?

In this week's Barron's, Doug Kass, who manages a short-selling fund called Seabreeze Partners Short L.P., indicated that Goldman is a good short candidate. A weakening IPO and M&A market would certainly point in that direction. Considering that a big part of the firm's profits come from proprietary trading, hedge fund difficulties in the market add to Goldman's vulnerability.

Shorting a stock is a risky proposition, especially for beginners. It might be a safe idea to avoid a stock like Goldman until there is more transparency in IPOs, M&A, and trading.

Fool contributor Tom Taulli does not own shares mentioned in this article.