(FORTUNE Magazine) – Not long ago, Ethan Penner, the former investment banking star at Nomura Securities, was one of Wall Street's sun kings. He tossed out billions of dollars in real estate loans and dazzled clients by hiring performers like Bob Dylan, Stevie Nicks, and the Eagles to entertain them at his annual conferences. Then two years ago his mortgage-lending operation blew to smithereens. And that was the last most people heard about Penner for a while. Now the 38-year-old fallen banker has resurfaced in Silicon Valley, where he's trying to recreate himself as--what else?--a Net mogul.

Before his flameout, Penner, a self-described "visionary," was best known as the pioneer of securitized commercial mortgages. Hired by Nomura in 1993, he single-handedly jump-started the national real estate market, making $35 billion of loans in five years. Even more impressive, he created a huge market for Nomura's debt. Penner stirred up big batches, sliced them up into pieces with varying degrees of risk, and fed them to institutional investors whom he wooed at his earsplitting conferences, modeled after junk-bond wizard Michael Milken's Predators' Ball. At the height of his success, he unveiled a greatly hyped but less than successful plan to securitize rock stars' future earnings, making loans to Rod Stewart and Metallica's drummer Lars Ulrich (even leaping onstage himself at the House of Blues to belt out his own karaoke version of Steppenwolf's "Born to Be Wild").

It was great fun while it lasted. But the market for Penner's signature products collapsed in the summer of 1998. He resigned from Nomura in September, five days before the bank announced that his subsidiary, Capital Co. of America, had lost $275 million in the previous six months. Penner departed with a $30 million payout. Nomura, on the other hand, was left with such a headache that it closed down Penner's shop at the end of the year.

But here's where Penner's saga becomes almost cliche: he is looking to Silicon Valley for vindication. "Wall Street's a very jealous place," Penner says reproachfully. "Silicon Valley is a place of dreams. It's really a different place." In April we'll begin to see how his dreams play out, when eTime Capital, a Sunnyvale, Calif., startup that he joined, officially launches. Last July Penner met eTime CEO Rohan Champion, a former chief strategist and worldwide business development head at FedEx, who had just founded a company that promises to enable companies to track the flow of their products on the Internet. Penner was impressed enough to come aboard as eTime's financial guru. You'd think the rock & roll banker would be a trifle bored by the thought of following the trajectories of hubcaps or semiconductors. However, Champion is convinced eTime's service will streamline the shipping process so much that his customers will get paid much more swiftly. Penner's mission is to securitize his clients' accounts receivable in a way that'll interest Wall Street--just as he once did with skyscraper mortgages.

Champion and Penner must be doing something right: eTime is being financed by the Mayfield Fund, a leading Silicon Valley venture capital firm, and Texas oil billionaire Robert Bass. But talk to Wall Street analysts and bankers about the securitization scheme, and they frequently mention Penner's fall from grace. The more jaded ones say it sounds as if Penner were simply doing what he has always done: taking big risks with other people's money. "How many firms is this guy going to blow up before people figure it out?" says one banker. Penner says he was unfairly scapegoated for Nomura's troubles. He claims to have made $1.5 billion in profits for his former employer, and insists Capital Co.'s losses looked a lot worse in the fall of 1998 than they actually were, because of the collapse of the Russian economy. "Nomura's return on equity exceeded 35% while I was there," Penner says.

Still, you have to wonder whether Penner is looking for opportunities out west because he no longer seems to have the most stellar reputation on Wall Street. His new partners seem to have accepted Penner's version of the mess at Nomura. "I have come to absolutely understand the situation [at Nomura]," says Champion. "I have the highest regard for Ethan." Perhaps more important, eTime's primary financial backers wave off his past problems as immaterial. "I think Ethan is an incredible visionary," says Yogen Dalal, general partner at the Mayfield Fund, who sits on eTime's board.

For obvious reasons, Penner wants to shake his reputation as Nomura's rock & rolling banker and present himself to west coast luminaries as a fresh face. That may not be so easy. Sure, doors are opening for Penner all over the Valley, because everybody, it seems, is dying to meet Rod Stewart's banker.

--Devin Leonard