The Telegraph reported that Peter Jones, Connaught’s Northern managing director, made a total of £264,953 by selling shares on May 21 and June 23.

The second sale was only two days before the June 25 profits warning that sent shares plunging 217.2p to 103p over three days.

Jones is registered with the City watchdog as a “person discharging managerial responsibility”, which means both the company and the regulator deem him to have in-depth company information and must seek permission each time he deals in the company’s shares.

Selling shares with insider information when a company is about to disclose a price-sensitive statement is a clear breach of City rules.

A company spokesman said Connaught had launched an internal investigation. Jones is still working for the housing group pending the results of the probe.

Connaught, which specialises in repairing and maintaining social housing, has fallen a total of 68% since it warned a number of public sector clients had postponed capital expenditure, which would result in a £80m fall in expected revenue this year.