United claim that they had the option to skeep him on until the end of May, a claim denied by Distin's representatives who say that he was allowed to discuss a move away from St James Park from the middle of April.
Manchester City, managed by former Newcastle legend Keving Keegan, refute the allegations with City's chairman David Bernstein saying that there is no foundation to the claims.
The Football Association have confirmed that they are investigating the complaint, rather than the Football League.
"There was a complaint from Newcastle United which went to the Football League, but because at the time Manchester City and Newcastle were in different leagues, it becomes an FA matter," explained an FA spokesperson.
"We have the complaint from Newcastle and we have written to Manchester City for their observations on the case.
"We are awaiting their reply at the moment and will act following that."