The financiers were there to celebrate a junk-bond deal that got away. They'd worked with Sparkman Energy Corp. for months, but the natural gas pipeline company had stopped returning their calls. Contractual terms that Drexel was proposing for the bond, particularly investor protections known as covenants, had been deemed too strict, says Vince Pisano, an attorney who worked on the deal.

At the dinner, Pisano recalls, some bankers wore custom-made belt buckles that featured Sparkman's logo—crossed out with a slash. They were luckier than they realized at the time. Five years later, Chairman Wallace Sparkman would reach a settlement with the U.S. Securities and Exchange Commission, neither confirming nor denying participating in an alleged kickback scheme.