Nicola Sturgeon has described the situation involving former SNP MP Michelle Thomson as "not easy" for the party.
Ms Thomson withdrew from the SNP whip in 2015 when a police inquiry into allegations of mortgage fraud was launched.
The former Edinburgh West MP, who learned last week that she will not face court proceedings, said she had been given no choice, and asked for an apology from Ms Sturgeon over the party leadership's handling of the matter.
The First Minister and SNP leader admitted the situation had not been easy for Ms Thomson, but added that it had not been easy for the party either.
In an interview with the BBC, Ms Sturgeon said: "I regret very much that we were confronted with a situation where one of our newly-elected MPs was facing serious allegations - of course I regret that.
"It wasn't a situation of my making, it wasn't a situation, clearly, I would have chosen to be in. And I appreciate that what followed on that, the investigation that took place, was not easy for Michelle Thomson and it wouldn't have been easy for anyone in that situation.
"But I think people would also appreciate that it wasn't a particularly easy situation for the party to be in either.
"Michelle is now, happily, in the position where she can put this behind her. She has been cleared of any wrongdoing and I am sure she is very relieved about that so we can now look forward and have a discussion directly with her."
Ms Thomson, who has always denied any wrongdoing, said she had received ''no support'' at what was a ''frightening, disturbing and alarming'' time and had been told by SNP business convener Derek Mackay she would need to resign the whip.
Scotland's Deputy First Minister John Swinney told BBC Scotland's Good Morning Scotland programme: "Obviously the decision to withdraw from the party whip was Michelle's decision that was taken as a consequence of conversations with those responsible for conduct matters within the party and obviously it's for Michelle now to consider how she moves on with her life in light of what I acknowledge has been a very difficult set of circumstances."
The former MP, who was first elected in 2015, was one of five people named in a report sent to prosecutors last December following the police investigation.
Last week, Scotland's Crown Office and Procurator Fiscal Service said there would be no criminal proceedings due to an absence of sufficient credible and reliable evidence.
Ms Thomson was linked to deals involving Christopher Hales, a solicitor who was struck off for professional misconduct involving transactions in 2010 and 2011.
She said she was not aware Mr Hales had been struck off until it emerged in the press in 2015.
Ms Thomson, who sat in the House of Commons as an independent, stood down as an MP at the general election in June.