HSBC (0005) was acquitted by a South Korean court of charges that the bank engaged in illegal short-selling, a blow to the government’s efforts to rein in abuses in the stock trading practice.

In its ruling Tuesday, the Seoul Southern District Court said there was no evidence that HSBC employees knew of the rule violation before carrying out the trades in question, according to Yonhap.

The ruling comes after South Korean prosecutors investigated and indicted the bank and three traders at HSBC’s Hong Kong unit in March on allegations of conducting naked short selling — a practice of selling shares without securing them first — amounting to about 15.8 billion won (HK$84.7 million).

The case, closely watched by overseas investors, resulted in what the local media reported to be the first indictment against a foreign bank on charges related to naked short selling. HSBC has previously argued that the Korean prosecutors’ approach was “arbitrary” and the verdict likely reassures foreign investors who are calling for loosening of stock trading rules in the country.