I work in a regulatory environment (much lower level) and have turned down stuff (cheap stuff, like a reception where I might get comped a drink).
Out of sheer politeness, I sometimes respond with a "those stuffed shirts say I can't". It's a handy non-confrontational excuse that can't really be argued against, and doesn't make you sound like a prig.
Did you then continue to casually extend a dinner invitation? I get it, people don't want to seem like cold assholes. But I think we should be very wary of a regulatory environment where high-level executives give heartfelt apologies intermixed with personal stories and backup plans instead of clearly rejecting such obviously inappropiate offers.
If you're a decent regulator, it's your job to be a cold. That's basically the whole point. You don't need to be an asshole, but you should damn well insist on deference and distance.
By way of analogy, can you imagine a judge dispensing with formalities and telling the people facing him in court "Relax! Call me Jim." Obviously not. Because when it comes to the law, conspicuously arms-lengths relationships are essential.
Honestly, a few of those folks were in grad school with me far before they were on the "other side" (actually this is true of "both" other sides). We thrash each other in meetings and can perfectly drop work over dinner.
That's the problem, it's a small world, and blurry lines, when you get to highly technical corners of it.
Out of sheer politeness, I sometimes respond with a "those stuffed shirts say I can't". It's a handy non-confrontational excuse that can't really be argued against, and doesn't make you sound like a prig.