JJB Sports and the Financial Services Authority are investigating share dealings in the sportswear retailer after it discovered that its chief executive Chris Ronnie failed to inform it that his stake in the business had been transferred to the administrators of Icelandic bank Kaupthing last year.
Separately, JJB warned it would rack up losses of between £5 million and £10m for the year ended January 25.
JJB Sports said it was unaware that the ownership of shares had changed until Ronnie informed it earlier this week. Ronnie said he was not aware of the date or place, or of the price per share of the transaction.
The investigation could lead to Ronnie being suspended or removed permanently from the business.
Ronnie acquired a 27.5% stake in JJB in June 2007 via a firm called Guro Leisure. He is understood to have borrowed the money to buy the shares from Kaupthing but breached his personal loan agreement with the bank at some point last year. As a result, the shares transferred back to Kaupthing.