LAZARD, THE New York-based investment bank, is being investigated by two financial watchdogs in the US over the role corporate gifts and entertainment played in its relationship with a fund manager.

The bank said it had been subpoenaed to provide information on gifts as part of an inquiry being conducted by the Securities and Exchange Commission and the National Association of Securities Dealers. Lazard disclosed the investigation, which is into the relationship between its capital markets division and an unnamed fund company, as part of a regulatory filing ahead of its planned $850m (pounds 455m) flotation.

The watchdogs are understood to have requested information more widely on Wall Street, after they said in November they were investigating whether brokers had given sporting-event tickets and other gifts to their mutual- fund clients.

Officials at the SEC and the NASD said they launched the inquiry to determine whether gift-giving was widespread. Their concern is that fund managers are directing share trading business to brokers who shower them with gifts, rather than seeking to find the best deals in the market for clients.

Already the industry-wide inquiry has claimed casualties. Jefferies, a US brokerage, fired a sales trader, Kevin Quinn, in October for racking up improper travel and entertainment costs. Fidelity Investments said in December it had uncovered instances where there were violations of its policies.

Lazard said in its filing: "We have received a letter from the NASD as part of what we understand to be an industry investigation relating to gifts and gratuities. In addition, we have received a subpoena from the SEC similarly seeking information concerning gifts and entertainment involving a mutual fund company. We believe that other broker-dealers have received similar subpoenas."

Lazard, headed by the combative Wall Street veteran Bruce Wasserstein, also insisted the capital markets part of the business would not be part of its IPO. It will instead continue to a private business owned by Lazard's managing directors.

Separately, the filing said Lazard would curb the amount it spends on paying its bankers by $100m over the next year.