The ONLY acceptable reason for a manager to be sleeping with someone who reports directly to him, or any other similar situation (e.g. a professor with a student in his class) is if a romantic relationship of long standing predates the power relationship. E.g. if a man's wife of ten years is assigned to report to him, there's no reason they should stop sleeping together. (I know one guy, the father of a friend of mine, who was promoted to an executive position in his company. That position came with a secretary, and his wife (who already worked for the company) was chosen to work as his secretary. This was the only case I know of where a boss was sleeping with his secretary, yet there were no ethical or moral problems with it).

But anything except a pre-existing relationship is fraught with peril: implied coercion and/or quid pro quos are just some of the problems that can exist. There are darn good reasons why that sort of thing is widely forbidden.

This should be obvious to everyone, but sometimes the obvious needs to be restated, apparently.