(Dow Jones) Recruiting young athletes who stand to earn millions of dollars during their professional careers can be lucrative for financial advisors, but it requires navigating through a compliance minefield.

Crossing certain lines, whether intentional or not, can have bad consequences for advisors. There are also gray areas where rules may govern athletes' behavior, but not necessarily that of advisors.

Sports agents have played the game with college athletes for decades. Financial handouts to cash-strapped students are known to occur, even though they are generally prohibited. The market for amateur athletes is "historically rife with people trying to funnel funds to the kid or the kid's family," so they can get their hooks into young athletes before they sign a big contract, said Owen Seitel, a San Francisco-based sports lawyer.

Financial advisors who engage in similar practices, however, could face scrutiny by multiple securities regulators. Situations that lead to athletes violating National Collegiate Athletic Association rules, which govern the conduct of member schools, their employees and student-athletes, could also mean bad press and reputational damage for advisors.

The subject is so touchy that many advisors of athletes declined to comment when Dow Jones Newswires asked them to define practices in which advisors shouldn't engage.

"There are lots of things that go on behind the scenes in that market that I choose not to participate in," said Shunte Jones, an advisor with Wealth Development Strategies LP in Houston, who manages finances for professional athletes.

She takes her compliance responsibilities a step further. "I do not recruit rookies," said Jones. She won't try to recruit business from an athlete who hasn't been drafted or signed, or who doesn't appear on the roster of an official team, she said.

A controversy involving a former Merrill Lynch advisor, Jeffrey Hausinger, and a former University of Oklahoma basketball player, Keith "Tiny" Gallon, shows how quickly the fingerpointing can begin when money changes hands between advisors and amateur athletes or their families.

Hausinger's lawyer acknowledges that Hausinger lent $3,000 from his personal account to Gallon's mother. At the time, Hausinger was working for Merrill Lynch in Tampa, Fla., and Gallon was an incoming student at Oklahoma. That activity made headlines in Oklahoma when it was reported, as a bank wire transfer, by the celebrity news website TMZ in March.

The lawyer, Ernest Badway of Roseland, N.J., said no securities rules were violated and that Hausinger wasn't trying to solicit business. Gallon's mother repaid the loan, he said. Merrill Lynch's compliance department became aware of the transaction at that time and cautioned Hausinger to conduct his personal business only at home, Badway said. A Financial Industry Regulatory Authority Inc., or Finra, rule prohibits lending money to clients, but Gallon and his mother weren't clients of Merrill Lynch, a unit of Bank of America Corp. (BAC), said Badway.