Paul Brennan, principal of The Richard Huish College in Taunton, was suspended last week. A special committee set up by governors is investigating after Mr Brennan allegedly failed to stick rigidly to his college's financial regulations.
The suspension comes just weeks after the departure of Southampton College principal Dr Patrick Lavery, ousted in a "colonels' revolt" of senior managers. It prompted warnings from the Association of Principals of Colleges of a "hire and fire" culture increasingly emerging in colleges.
General Secretary Bernard Smith said: "When things go wrong there are many many complicated issues, and firing the chief executive does not always tackle the underlying problem."
The college, which now has more than 1,000 students, has grown rapidly under Mr Brennan's four-year leadership, and diversified into non-sixth form areas such as adult access courses.