Golf outing of Mr. DeSano, Fidelity Investments’ head of stock trading, may cost him a little more hassle that he would like too as federal regulators have picked up the matter in yet another move, likely to disrupt the sleep of Wall Street big fish.

Mr DeSano’s participation in the annual AT&T Pebble Beach National Pro-Am golf tournament was courteously provided by Bank of America Corp., anxious to please him in order to win trading business from Fidelity. The cost of the invitations and the possibility of corporate gift-giving and entertainment biasing the decisions of mutual fund managers is now examined by the NASD regulators. Some sources say that the SEC has also subpoenaed Fidelity, the Bank of America and other firms with which Fidelity did business for information about entertainment extended to some of Fidelity’s employees.

The NASD said in 1999 that it "does not limit ordinary and usual business entertainment," as long as it is "neither so frequent nor so extensive as to raise any question of propriety." So far entertainment has been viewed on Wall Street as a harmless pursuit that never bothered the regulating authorities. Now the question arises of where to draw a line between proper and improper entertainment.

"It’s a bit of a gray area because it requires judgment calls from both the firm and regulators," says Roy Smith, a professor of finance at New York University and a former partner at Goldman Sachs Group Inc.
Meanwhile, the firms involved have tried to rebuff the allegations of impropriety.

"We would not request or expect our guests to contribute to the fees associated with our corporate sponsorship package," a spokeswoman for the Bank of America said. In her words, the BoA has the "highest ethical and regulatory standards across all its business lines" and has controls in place to ensure that all the deals are appropriate.