The Financial Markets Authority is investigating suspect trading in Xero shares that preceded a major capital raising by the software firm earlier this year.

An NZX spokeswoman today confirmed the sharemarket operator had referred the matter to the FMA on June 8.

"Much of the trading activity during the relevant period was undertaken offshore, which impacted NZX Surveillance's review process and the ultimate timing of the referral," she said.

"The FMA continues to consider the matter and is the most appropriate to contact for any further enquiries."

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An FMA spokeswoman said the regulator could not comment until its inquiry into Xero was completed.

Despite no price sensitive information being released to the market, shares in the software developer spiked in the lead-up to the February 25 announcement that the firm had raised $147 million from North American investors.

On February 19 NZX issued a "please explain" notice to Xero, which noted that its share price had gained 15.9 per cent between February 17 and February 19.

In response, the firm said it was in compliance with its continuous disclosure obligations.

Contacted this afternoon, Xero chief executive Rod Drury said the company had conducted an internal investigation in February and had found nothing untoward.

"We haven't heard any more from them [the FMA]," he said. "I haven't even thought about it for the last six months."

In February, Forsyth Barr's head of institutional broking, David Price, told BusinessDesk that the pre-announcement trading reeked "to high heaven".