Marks & Spencer chief Stuart Rose has denied any wrongdoing as the UK's financial watchdog probes "suspicious price movements" in the firm's shares.
Stuart Rose is fighting his corner
Mr Rose told BBC Radio 4's Today programme: "If I had done something wrong I would step down from the company. I have done nothing wrong."
The probe comes after Mr Rose spoke to retail tycoon Philip Green before buying 100,000 M&S shares on 7 May.
Mr Green on 27 May said he was thinking of bidding for M&S and the shares rose.
1. Stuart Rose buys 100,000 M&S shares (7 May, closing price 277p)
2. Rose meets Philip Green (12 May, 271p)
3. Green says considering M&S bid (27 May, 345p)
4. Rose starts job at M&S (1 June, 365p)
5. M&S rejects Green's first bid (3 June, 356p)
According to the BBC's business editor Jeff Randall, the investigation by the Financial Services Authority (FSA) could have an impact on the battle for control of the food and clothing retailer.
Mr Rose was appointed to the top job at M&S to help defeat the unwelcome approach by Mr Green and his backers.
"This is now a full-blown investigation," the BBC's Jeff Randall said. The FSA will focus on "who bought shares, when they bought shares and what they knew when they bought shares".
"M&S's entire defence swings on Stuart Rose. Until he turned up, the company was seen as a bit of a basket case ready to be rolled over by Philip Green."
M&S said it was confident that the FSA would find Mr Rose had done nothing wrong in buying M&S shares before the takeover bid was launched.
"The board is totally supportive of Stuart Rose," it said.
"When Stuart Rose acquired shares in M&S on 7 May, he did not know either that Philip Green would make a bid for M&S or that he would be asked by the company to become its chief executive," M&S said.
"Stuart Rose was at no point part of Philip Green's bid team," the company added.
Mr Rose said he would fully co-operate with the FSA's investigations.
Speaking on the Today programme on Monday morning, he laid out his version of events.
"I have always had an interest in M&S," Mr Rose said. "I've traded the shares at various times over the last 12 months."
"I'd informed my broker earlier this year that I was interested in topping up my M&S shares and I'd been in touch with him for the preceding three weeks."
"I have not denied that I bought shares on 7 May - what I have denied and continue to do so, is that I did know that Philip Green was bidding."
Mr Rose claims there was no mention of a bid for M&S during the telephone conversation between himself and Mr Green.
But at a subsequent meeting on 12 May, Mr Green told Mr Rose - who had not yet been asked to head M&S - that he was considering making a bid for the company, M&S said.
Probe stepped up
On Saturday the FSA revealed it was stepping up its inquiry into trading of the company's shares.
"We are satisfied that there is something further that we need to investigate," the FSA said.
The FSA's probe centres on "suspicious" changes in the company's share price before Mr Green revealed he was considering a takeover offer on 27 May.
Mr Rose's shares are thought to have increased by about £86,000 since he bought them.