Source: Sharecast
In a brief statement, the company said the regulator has begun an investigation covering the period from January 2022 to March 2024.
It relates to certain historical statements about Drax's biomass sourcing "and the compliance of Drax's 2021, 2022 and 2023 annual reports with the Listing Rules and Disclosure Guidance and Transparency Rules".
"The company will cooperate with the FCA as part of their investigation," Drax said.
At 0930 BST, the shares were down 9.6% at 636p.
Russ Mould, investment director at AJ Bell, said: "Having previously drawn fire from the media for the sourcing of wood for its biomass pellets, Drax now faces the potentially more serious situation of being under the harsh glare of the Financial Conduct Authority over the same issue.
"Notably the investigation covers several years’ worth of accounts and follows accusations from one of its former top lobbyists earlier this year at an employment tribunal that it had misled regulators, the government and the public.
"Drax was already fined a meaningful sum by Ofgem almost exactly a year ago for inaccurate data on sourcing for its pellets.
"There will be concern about any sanction levied by the FCA but also what it might mean for the subsidies the company continues to receive from government.
"The share price reaction shows the market is concerned about the impact this could have on the business and, while the company is important to the UK’s energy security, that doesn’t mean it can escape scrutiny on its sustainability credentials."