(Bloomberg) — South Korean prosecutors have indicted BNP Paribas SA for allegedly violating short-selling rules, according to people with direct knowledge of the matter, the latest development in the country’s crackdown on such deals.

The French bank was accused last week of violating local capital markets law, according to sources who requested anonymity discussing a private matter. The Seoul Southern District Prosecutor’s Office earlier this month indicted a global investment bank and a global hedge fund for conducting illegal short selling, without naming them, according to an office spokesperson.

The global investment bank’s transactions under indictment took place from September 2021 to May 2022 and were worth 18 billion won ($13 million), according to the office’s statement last week . Traders repeatedly violated short-selling rules over a “long period of time,” it says.

Regal Funds Management Pty Ltd., one of Australia’s largest hedge funds, said last week it had been charged, along with a former employee, for an alleged violation of securities trading regulations in 2019. Regal denied the allegations and said he was “considering his rights.” under South Korean law.

BNP Paribas, the prosecutors’ office and the Korean Securities and Futures Commission all declined to comment.

The indictment comes after Bloomberg News reported in December that Korean financial regulators had fined BNP Paribas, its domestic brokerage division, and HSBC Holdings Plc a total of 26.5 billion won for short selling uncovered. HSBC’s Hong Kong division and three of its traders were indicted by Korean prosecutors over allegations of illegal short selling in March, with the bank pledging to defend its position “vigorously”.

The financial sector is facing increased scrutiny in Korea, which banned short selling on its stock market a year ago. Banks including Credit Suisse Singapore Ltd., as well as hedge funds such as Segantii Capital Management Ltd. and Jane Street Group LLC, were also investigated and fined as part of the crackdown.

Shares of BNP Paribas slipped 0.3% in early trading Friday, paring its gains so far this year to around 4%.

In the second quarter, the Paris-based bank’s stock traders made more money than their bond-holding colleagues for the first time, underscoring the unit’s growth in recent years. Revenue from buying and selling equity derivatives and providing prime brokerage services jumped 57% to 1.15 billion euros ($1.2 billion) in of the period, the bank announced in July.

BNP Paribas employed 318 people in Korea and generated 133 million euros in turnover last year, according to its annual report. The bank is expected to release its third-quarter results on October 31.

Korea’s top financial regulator said last month it plans to lift the ban on short selling at the end of March and will ensure necessary revisions are in place by then . The aim is to enable the strategy on all stocks, not just a limited number of stocks, Financial Services Commission Chairman Kim Byoung-hwan said at the time.

–With help from Denise Wee, Michael Patterson and Steven Arons.

(Adds more details in the third paragraph and BNP Paribas shares in the eighth.)

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