Perhaps you are correct, however, in the absence of anything that even hints in the slightest of impropriety, I would not place ANY restriction, limit or anything of the sort on player D. I guess this is one of those situations where we can agree to disagree.
Once there is some (read ANY) hint or suspicion of impropriety between C and D, then the above DOES NOT APPLY and I totally agree with your restriction, limit or whatever we want to call it. In fact, I might suggest to C and D that it would be a good idea for them to find a different place to play.
Chet