Financial Services Authority to investigate troubled social housing company according to reports

The Financial Services Authority is to launch an investigation into social housing firm Connaught, after the firm’s share price fell 69% yesterday when the company said it was in line to breach banking covenants.

According to the Financial Times the FSA is to pursue “several lines of enquiry” against the firm, which had previously said it could continue to operate comfortably within its banking covenants.

The FT said the inquiry includes checking whether the company released price-sensitive information to the market in a timely manner.

The company’s banks, led by Royal Bank of Scotland, are to decide in the coming days whether to provide a capital injection for the company. Connaught said yesterday that following an urgent review undertaken by it and its advisors it urgently requires extra funds to meet the “current and ongoing needs of the business.”

It said that its debt would be significantly in excess of the £120m previously advised and that it will breach banking covenants

Shares in the company rose 11% in early trading today, but remained almost 70% below their Monday opening price.