Goldman Sachs is the Wall Street mega-firm that people either love or hate — or love to hate. Its money-making prowess leaves many impressed, envious or suspicious. To admirers, the revolving door between its executive suite and high government office shows commitment to public service. Detractors call it undue influence.

Now the firm’s reputation is on the line, as it fights a fraud suit brought by the U.S. Securities and Exchange Commission (SEC) over a single deal in 2007, the sale of a complex “synthetic collateralized debt obligation” called Abacus 2007-AC1. The deal lost investors $1 billion but produced $1 billion in profits for Goldman’s collaborator, Oregon-based Paulson & Company, a hedge fund betting the housing bubble would collapse.…