The move follows a clash of personalities, and comes less than two weeks after investors allowed Mr Rooney to stay on at the company.
The blunt-speaking Mr Regan, best known for his role running the household goods group AG Stanley, took the job on the condition that if he was not happy with Mr Rooney's behaviour as chief executive he could get rid of him.
The fact that Mr Rooney, who jointly founded the group more than 20 years ago and has a 16 per cent shareholding, was kept on at all surprised many in the City.
Institutional investors, led by the Prudential, had pressed for his removal. However, Mr Rooney was retained after three other members of the board threatened to resign if he was forced out.
A source close to the group said Mr Regan and Mr Rooney crossed swords early on over the way the Spring Ram is being run, and Mr Rooney's flamboyant style. But the two finally fell out over the bid approach made by the US group Masco last week.
Mr Regan was angry about the leaking of the approach to the press, and has blamed Mr Rooney, who was one of the promoters of the deal.
Mr Regan told Masco to name its price before he would enter any talks. Masco said it could only offer 45p a share, compared with a closing price of 69p on Friday, and Mr Regan broke off the talks. The Masco team is understood to have returned to Chicago to consider its position.
'He (Mr Rooney) has not helped by trying to call the shots, and his position is now very tenuous,' said a senior source.
Mr Regan and the new finance director, Martin Towers, are now working towards producing half- year figures for the group by 22 September. They have commissioned a report on the group's finances by Price Waterhouse, the accountancy firm that is understood to be replacing Arthur Andersen as Spring Ram's auditors.
The new management team is also reviewing the position of Spring Ram's stockbroking advisers, Panmure Gordon.