The financial watchdog has launched an investigation into the handling of inside information at defence and aerospace firm Cobham, ahead of one of its numerous profit warnings last year.
The Financial Conduct Authority is examining how the company handled information about last year's £500m rights issue, announced in April when the firm revealed profits for the year would be £15m under expectations.
The rights issue was meant to slash the company's substantial debt load.
Cobham's shares dropped on the news and at the time of writing were down 2.17 per cent to 126.40p; after falling more than 40 per cent in the past year.
The company issued a regulatory statement today saying it had been "informed orally" on 24 March that it was being referred to the FCA's enforcement division for investigation in connection with the firm's "handling of inside information prior to its trading update and announcement of its intention to undertake the 2016 rights issue on 26 April 2016".
Cobham said in a statement that it was "cooperating fully with the FCA and will update the market on the outcome in due course".
The news follows a turbulent period for the aerospace firm, after it issued its fifth profit warning in under two years in February, causing shares to tumble more than 20 per cent.
The FTSE 250-listed company downgraded its 2016 trading profit to £225m after deducting £20m of year-end adjustments from January's forecast.
Cobham announced at the beginning of the year that it was ditching its final dividend "in the light of the disappointing trading and higher than expected net debt". Investors have also been asked to subscribe to a second £500m rights issue.