(FORTUNE Magazine) – John Kerry may have won Iowa, but Wesley Clark cleaned up on Wall Street. On Jan. 20, just a day after the caucuses, bankers tell FORTUNE, Clark made about $1.2 million in paper profit on his investment in Messer Griesheim, when the private German maker of industrial gases agreed to sell most of its assets to rival Air Liquide. While the $3.3 billion deal went largely unnoticed in the U.S., it was the best investment Clark ever made. And it barely cost him a dime--thanks to a low-interest, "non-recourse" loan from Goldman Sachs, which insulated Clark (a Messer director since August 2001) from any personal exposure. "Was he smiling yesterday?" wondered a Goldman executive, just hours after the Euro-deal was announced. "General Clark's probably got more money than he's ever had in his life."

Clark resigned nearly all his directorships last fall after he announced his candidacy. But he stayed on Messer's board until early January. Goldman co-owns 67% of the firm, and "Clark was our guy on the board," says a Goldman insider, who adds that the company wanted to find a way to give Clark a stake. But Goldman's stock was held by a fund whose bylaws didn't permit loans. So, in a complex swap, Messer loaned Clark 500,000 euros for his 6,734-share purchase in mid-2002, and then Goldman bought the note from Messer. The non-recourse terms mean that if the deal had gone south and Clark defaulted, Goldman would be stuck. In other words, pure upside for Clark, who repaid the note--but kept stock when he left the board.

Overall, that was the biggest home run of the general's brief tenure as a businessman. After leaving the military in mid-2000, Clark spent nearly three years working as a managing director for Little Rock's Stephens Group, one of the largest investment houses off Wall Street. He was eventually pushed out--and left behind some sour feelings.

Clark's primary role was to help the firm expand into defense and IT sectors. He used his impeccable contacts to gain not one but two audiences with Defense Secretary Donald Rumsfeld, giving Stephens an inside track on the government's Iraq thinking. And he was likable, often speaking to packed rooms during client forums. "He's smart, he knows the technology, and has the contacts," says Warren Stephens, the firm's CEO. "But we needed about five years with him--to help him filter deals. As with many who are new, he thought everything he saw was doable."

Clark helped one Stephens-backed firm, SmartSignal--which uses harmonics to determine when an engine is failing--to get a contract at DARPA, the DoD's research wing. And as both a lobbyist and board director, he helped another Stephens-backed firm--Acxiom, one of the world's largest processors of consumer data--secure government contracts in homeland security.

But he couldn't persuade Stephens to back a DARPA-funded startup called PharmAthene--a Virginia developer of biowarfare vaccines, whose chairman, Joel McCleary, is a former treasurer of the Democratic National Committee. (Clark joined PharmAthene's board last January, just days before Stephens suggested he resign.) And Warren tells FORTUNE that Clark never informed the firm about his Messer investment. According to top securities lawyer and ex-prosecutor Sean O'Shea, employees of securities firms "must disclose an outside investment" to their bosses. Violators can face disciplinary action by regulators. (Clark says he's "very grateful for the start" in business that the Stephens family gave him, but declines further comment.)

Warren says he nudged Clark out after the General began publicly criticizing the Bush administration and it became clear he had presidential ambitions. (Warren serves as finance co-chair of President Bush's reelection drive in Arkansas.) "He was disappointed, and so was I," says Stephens. At the time, Clark had a different spin. On March 1, he told the local paper that he had decided to leave Stephens to prepare for covering the war as a military analyst for CNN--a post he had held since 2001. Before packing his bags Clark asked Stephens's top deputy, Curt Bradbury, a staunch conservative, if Warren would ever rehire him. "When you get well," Bradbury responded. --Richard Behar