Carphone Warehouse said Monday its co-founder has resigned as a director after disclosing that he had pledged millions of his shares in the company to secure personal loans.
Ross also used his stakes in National Express Group, Cosalt and Yellow Group as collateral to borrow.
Under disclosure and transparency rules, directors must notify their company within four days of any share dealing made for their benefit.
Penalties range from a private warning to a fine, said a spokesman for the agency, speaking on condition of anonymity.
Carphone Warehouse said Ross had pledged his shares as collateral on various agreements going back to 2006, telling the company only on Sunday.
The British mobile phone retailer said Monday that David Ross, its non-executive deputy chairman, had revealed he had pledged 136.4 million ordinary shares -- about 15 percent of the company's share capital.
Ross also committed 3 million of his shares in National Express, 4 million in Cosalt and 11.5 million in Yellow Group, to support his personal borrowing, the companies said Monday.
Ross is chairman of National Express and a director in the other two firms.
None of the loans are in default and Ross remains chairman of National Express, the company said.
The Financial Services Authority declined to say whether it was investigating.
The regulator's rules require directors to notify the company of dealings in its shares; dealing is defined broadly and includes using shares as collateral.
Carphone Warehouse said Ross has no current intention to sell his shares in the company.
Carphone Warehouse shares were down 4.3 percent at 90.04 pence. Shares have declined from 340.75 pence since Jan. 2, thus significantly shrinking their value as collateral.
Ross had been chief operating officer of the company between 1990 and 2003, and is the company's second-largest shareholder.
He had joined with Charles Dunstone, the chief executive officer, to set up the company in 1989.