By RANDALL SMITH

In the weeks since Goldman Sachs Group Inc. was sued over alleged fraud, the firm has engaged in a charm offensive to keep customers from defecting. But it hasn't always worked.

Goldman sent out emails to clients on the day of the allegations, April 16, giving the firm's defense. Since then, Goldman executives have crossed the country to meet personally with clients. One Goldman insider said colleagues crammed roughly two months of client visits into two weeks.

Last week, the $9 billion Oklahoma Teachers Retirement System voted to put Goldman's asset-management unit "on alert" for possible termination pending a review of the allegations as "an organizational concern."

Other clients say they are concerned as well. The Securities and Exchange Commission accused the firm of failing to disclose the role of a short seller in constructing a pool of mortgage-related assets sold to investors. Goldman has denied wrongdoing, saying its disclosures were adequate. A related criminal investigation disclosed last Friday and congressional hearings on April 27 focusing on the charges have intensified scrutiny of the firm.

The action by Oklahoma, which was earlier reported by Reuters, shows how state and local governments can be sensitive to such issues for political reasons. Goldman has ranked No. 5 in U.S. municipal underwriting in the years 2007 through 2009, according to Thomson Reuters. This year it ranks No. 6.

Such issues by state and local governments and authorities, many of them tax-exempt, are used for public purposes such as schools, sewers and water systems-financing projects often launched by elected officials and closely scrutinized by tax payers. Some public-finance experts say politics often plays a role in underwriter selections.

"I think in the municipal world, people are more sensitive to some of these issues just because of the political environment in which they live," says municipal-bond lawyer Dee Wisor of the Denver firm Sherman & Howard LLC.

Goldman declined to comment for this article.

"People are talking and this can't help them," said Brian Thomas, chief financial officer of the Metropolitan Water District of Southern California, which has issued short-term notes through underwriters including Goldman.

"In the near term I don't think it's going to have a large impact," Mr. Thomas added. "But we're concerned. We have talked to them. They called us pretty much after the news broke."

Goldman has met with clients "to discuss any concerns they may have with the firm," according to Brad Hintz, a securities analyst at Sanford C. Bernstein & Co. who met with top Goldman executives Friday. The upshot: Goldman has seen "no degradation of business," has been winning assignments it expected to win and "trade flows remain in line with expectations," Mr. Hintz added.

Some Goldman clients say they will have to see the whole case unfold before making longer-term decisions. "We're at this time very pleased with the services they provide," said James Fuller, chief financial officer of the Municipal Electric Authority of Georgia, which issued $2.7 billion of debt with Goldman as a senior manager in March. "We would like to see the situation play out and see what happens before we make any rash decisions."

Still, other public officials aren't waiting. Chriss Street, the Treasurer-Tax Collector of Orange County, a member of the county's public-finance advisory committee, last Friday called for "hearings to review the appropriateness of retaining Goldman Sachs" as an Orange County, Calif., underwriter.

In an email to Huntington Beach, Calif., Treasurer Shari Freidenrich, who heads the public-finance panel and is running for the Orange County Treasurer post that Mr. Street is vacating, Mr. Street cited the fraud charges filed in April.

In her reply, Ms. Freidenrich told Mr. Street that he was free to bring up the issue at the panel's next meeting on Thursday. "Then the board can decide if it would like to place this on a subsequent board agenda." Ms. Freidenrich referred a call to a county spokesman, who said that while Goldman is on a list of qualified underwriters, the firm hasn't done financing work for the county since 2006 and isn't under consideration for current assignments.

A federal bankrupcty court ruled in March that Mr. Street breached his fiduciary duty in a previous job as a trustee in the bankruptcy of Fruehauf Trailer Corp., ordering him to repay more than $7 million to the trust. Mr. Street said he is appealing the ruling.