Short sellers are upping their bets against Bank of California after the San-Francisco-based lender lost its chief executive this week and revealed it is under investigation by the SEC.

Data from Interactive Brokers' securities lending desk shows fees to borrow shares have increased from 1% to 1.5% and short interest (the quantity of stock investors have sold short) now stands at 25%. 

Shares in the NYSE-listed bank have been under pressure since October following reports of bank executives’ ties to a controversial financier.

The SEC is now demanding information related to a Bank of California press release responding to allegations of ties between the bank’s leadership and Jason Galanis, an LA financier who pleaded guilty to securities fraud charges over the summer.

Steven Sugarman, who helped recapitalize Bank of California in 2010, resigned as chief executive on Monday.

Meanwhile, Legion Partners, a Beverly Hills-based asset manager, has bought a 6.3% stake in the lender. 

The 13D filing also included a letter where Legion calls into question Bank of California's corporate governance and urged the company to consider strategic alternatives. 

“Shares are still available from lenders large and small but less than we have seen prior to this week’s events,” securities lending analysts at Interactive Data wrote on Wednesday.

“We believe this story will continue unfolding, affecting borrow fees in the process.”