NEWS of the fallen Wall Street knight's return travelled with the speed of a hot stock tip. On September 22nd, 1995, the day the Time Warner Inc., media and entertainment conglomerate announced its proposed 57.5 billion purchase of Turner Broadcasting System, a beaming Ted Turner gave credit to an "old friend" for helping to seal the deal Michael Milken, the former junk bond king who had served two years behind bars for securities fraud at the beginning of the decade.

"He's one of the smartest guys about the business that I know," said Mr Turner during the course of a giddy press conference. Apparently the leadership of Time Warner concurred, for the new partners agreed to pay Milken a consultation fee totalling 550 million if the merger wins approval from the US Securities and Exchange Commission (SEC), later this year.

By any measure it was a spectacular comeback, but there would be more. In the week that followed, Milken's name surfaced repeatedly as a consultant for high profile clients like Ronald Perelman, whom he had helped acquire the Revlon cosmetics corporation in the 1980s. For introducing Rupert Murdoch to chairman of MCI Communications Inc., Bert Parsons, he reportedly earned another $10 million.

Milken's old enemies were quick to react. In February the SEC reopened its file on the Los Angeles based financier, who had signed a 1990 "consent order" banning him, for life, "from association with any broker, dealer, investment adviser, investment company or municipal securities dealer."

Although the commission's lawyers decline even to confirm or deny the widely reported investigation, a government source said last week that the investigation was provoked by Time Warner's merger with Turner and other deals in which Milken has allegedly participated. The results of the inquiry were expected in six months. It was "premature," the source added, to say whether the regulators had uncovered hard evidence that Milken had in fact broken the law.

In a related development, on March a Federal judge in New York extended Milken's three year probation, which he began at the beginning of 1993, for an additional three months while the investigation proceeds. Clearly, the government wished to send a signal to Milken that the freewheeling financial wizardry he helped to popularise in the 1980s was no longer welcome.

Milken insists he has done nothing wrong, and no longer considers himself a member of the securities industry, says his spokesman, Michael Reese. "Michael's lawyers today are the same lawyers who helped the SEC craft the consent order in 1990. They know chapter and verse what Michael is allowed to do and what he is not allowed to do," says Mr Reese.

Since Milken emerged from prison in Dublin, California three years ago, he has been active on two fronts as a philanthropist for educational and health related causes and, now, as a business consultant for former clients from the 1980s.

What has prompted scrutiny from US government financial regulators, explains Mr Reese, is that Milken's friends have simply asked the former bond dealer for his counsel and advice and in some cases they have paid for the advice.

If that's true, then Milken will in all likelihood remain a free man, says Alan Bromberg, a Southern Methodist University securities law professor who has studied his case. "The SEC can't tell you not to invest in stocks on your own or stop you from telling your friends how to do it for a fee.

It becomes a question of regularity, says Marvin G. Pickholz, a former SEC assistant director of enforcement who now practices law in Manhattan, "Are you advising ten or more people on a regular basis? The SEC is going to have to figure that out with an intensely factual review of what's going on.

Whatever the SEC finds, many critics in the American business community will probably never welcome back a rehabilitated Milken, the once brash outsider who rarely advised Fortune 500 companies. "There's a difference between justice and revenge," says Mr Pickholz. "It was justice to punish Milken for the crimes to which he pleaded guilty and impose the proper fine. But some people are angry because they fined him $1 billion and it turns out he has more money than that. They're angry that they didn't just bankrupt him."

Of the so called Masters of the Universe who dominated Wall Street during the 1980s, none reigned with quite the ferocity of Milken, who from his desk in Beverly Hills created the surging market in junk bonds. Using proceeds from these high yield, high risk securities, Milken's clients at Drexel Burnham Lambert Inc., embarked on a delirious course of expansion and hostile takeovers, creating whole new industries in cable TV and small airlines.

For his troubles Milken, who married his high school sweetheart and still lives in the modest suburban house he bought in 1978, became almost unspeakably rich. In 1985 alone he earned $550 million.

Yet his fall was as spectacular as his rise had been. After stock speculator Ivan Boesky struck a deal with the government in 1986 and began revealing details of an insider trading ring, Milken pleaded guilty to six felony charges. Drexel Burnham Lambert declared bankruptcy.

Milken served his time and was released in early 1993. Within days he was diagnosed with prostate cancer, the disease that had recently struck down his good friend, former Time Warner chairman Steve Ross. To say that the biopsy results were devastating would be an understatement," Milken told Time Magazine. "I remember lying in bed with my wife and talking about the Book of Job, wondering how any more challenges were coming my way.

Milken "has dramatically altered his own lifestyle," says Mr Reese, his spokesman. The financier, whose illness is now in remission, eats only 1,500 calories a day, exercises at 5.15 a.m every day and meditates under guidance from best selling author Deepak Chopra.

In addition, Michael Milken has done what he seems to have been born to do he has raised money. Since it was established three years ago, his Association for the Cure of Cancer of the Prostate has funnelled in excess of $20 million into prostate cancer research. After the United States government, Milken funds the largest such effort in the world.