Federal prosecutors have decided against seeking indictments after a one and a half year investigation into allegations that investment officers illegally manipulated stock in the trust department of Virginia National Bank.

In a brief letter to the bank's lawyer dated Friday and made public by the bank yesterday, William B. Cummings, U.S. Attorney for the Eastern District of Virginia said that the investigation " . . . has been concluded and no further action is contemplated." The letter did not elavorate and Cummings could not be reached for comment.

The probe centered on charges brought by George D. Hamar, 56, a former investment officer at the bank, the state's largest. Hamer claimed it was a practice for his colleagues to buy stock and wait a few days to see if the price went up or down before deciding in which trust account to place the stock. Under a trust arrangement, a bank manages personal and corporate assets for a fee, frequently purchasing and selling securities.

Hamar maintained that larger, more aggressively managed trusts benefitted from the stock transfers at the expense of smaller trusts. He gave investigators evidence that at least on one occasion investment officers had held stock in a trust account for more than a month while the stock's value increased. Then the stock was transferred to 10 other accounts, one of which was a Virginia National Bank profit sharing plan.

In a interview following the release of Cumming's letter, bank chairman W. Wright Harrison said a relatively small amount of money, $11,300, was involved in the questionable stock transfer. He said the transfer was the result of an isolated mistake and added that the transfer was corrected so that "no account lost one penny."

The transaction was not reversed until after a national bank examiner for Comptroller of the Currency advised bank officials to do so. The examiner came to the bank in July 1976 after Hamar told the Comptroller's office in confidence of his suspicion. Hamar was fired in March, 1977 - in part, he said, because the bank examiner identified Hamar to Harrison as his informant.

In a confidential report issued in late 1976, the bank examiner left open a question of whether the transfer was the result of an honest mistake and whether it was an isolated case. He concluded, however, that there had been "serious breakdowns in controls of the lack of internal controls," in the trust department, that stock had been traded too frequently by investment officers, and that there were "significant irregularities" in one of the banks largest trusts.

Federal prosecutors presented evidence and questioned present and former officers of the bank before a grand jury in Richmond beginning in Spetember 1977. Hamar's charges also triggered an inquiry by the Securities and Exchange Commission and investigation by the U.S. Department of Labor.

SEC officials had refused to make public any information about their probe, or even to say whether it is still in progress. The Labor Department investigation, which is being conducted under the Employe Retirement Income Security Act, is incomplete, officials said. ERISA is involved because the assets of a number of pension plans are among the more than $1 billion the bank manages in its trust department.

In May, Hamar filed in Norfolk Circuit Court a $3.25 million suit against the bank and several of tis officers charging that he was fired for calling attention to the alleged wrongdoing in the trust department. Hamar declined to comment yesterday on the federal investigation.

Bank officials have refused to say why Hamar was fired, but in a statement issued yesterday, Harrison said: "We have had to contend with Mr. Hamar's charges for over two years, and this suit is simply a continuation of the same charges brought against the bank. However, we are confident that once the bank has the opportunity to present the facts before another judicial forum, the issues which Mr. Hamar has raised will finally be put to rest."