A committee of auditors said it is "highly possible" that the branch had committed insider trading over the deal, which related to the now-bankrupt Urban Corp, AFP said.
The developer had allocated convertible bonds worth 30 billion yen ($312 million) with BNP Paribas in July 2008, a month before it collapsed.
However, it did not disclose a swap contract attached to the deal that saw the 30 billion yen immediately repaid to the Tokyo branch of BNP Paribas.
The branch converted the bonds into Urban stock, sold the shares and repaid Urban. It did not disclose the contract swap to the market and made a profit of 1.18 billion yen trading on Urban shares that included short selling of its stock, the committee's report said.
"It was an extremely inappropriate act which disregarded general investors and the market," it added.
BNP Paribas is France's largest company, with offices in 85 countries and 171,200 global employees.