Michael Page is being investigated by the Financial Services Authority (FSA) to determine whether the recruitment group withheld market information from prospective shareholders before its recent flotation, a Sunday newspaper has alleged.

The article, written by the deputy City editor of Sunday Business, says that Page is facing a probe over claims that it failed to disclose a downturn in staff placement contracts before its £656.3m April IPO.

The company was bought by American staffing group Spherion in 1997 for £330m, and floated this year with a share price of 175p. This was 15p below the estimated price range of 190-250p which Page had initially offered investors. Even though the shares were sold at this price, the IPO was hailed as a success, as it took place during difficult market conditions and made Spherion a profit of over £300m.

At the time of going to press shares in Page stood at 148.5p, 26.5p below their offer price and only 10p above their 52-week low.

A spokesman for Michael Page denied that the company was being investigated by the FSA. ‘We have no knowledge of any such enquiry,’ he said.

Professional Recruiter contacted the financial watchdog but, at present, it is not their policy to comment on individual cases.

This is set to change at the end of the year. Currently the FSA only has the power to censure directors who break financial regulations. However the regulatory body is working on new rules which will give it the power to fine and name companies who breach the rules for share listings. The new regime is expected to take effect in December.