It's been nearly two years since the mutual fund trading scandal rocked Wall Street. Now, some of the scandal's players are looking to get back into the money game.

A former

Prudential Financial

(PRU) - Get Report

stock broker who resigned at the height of the scandal is the front man for a hedge fund that seeks to emulate a market-timing strategy without ruffling any regulatory feathers.

Sources say Frederick O'Meally, who was investigated by securities regulators but never charged, has been pitching his

Corneille Fund

to some former market-timing customers at Prudential, which is now called

Wachovia Securities

(WB) - Get Report

. Corneille, which officially opened for business 14 months ago, has taken in a modest $5 million to $10 million from investors.

In the $1 trillion hedge fund universe, Corneille, managed by Kismet Capital Advisors of Bay Shore, N.Y., is but a blip. What's intriguing about Corneille is its novel strategy and the questionable pedigrees of its promoters, one of whom was the manager of a defunct market-timing fund that shares a common lineage with Kismet.

The marketing brochure for Corneille says it invests long-term in "a group of international mutual funds" that share some of the same statistical characteristics as "U.S. indices that have correlations to movements in the world markets." Corneille contends that by using the proper mix of hedges, it can "execute a low-risk strategy that captures the price action related to these international movements."

To the novice investor, that sounds like gibberish. People familiar with mutual fund trading, however, say the strategy shares some traits with market-timing, which seeks to exploit the time-zone differences between -- and price discrepancies within -- U.S. and foreign markets.

The big difference is that Corneille doesn't seek to capitalize on the discrepancies by trading in and out of mutual funds -- one of the abusive activities regulators sought to eradicate. Their investigation has netted more than $3 billion in fines and restitution to date.

Rather, Corneille appears to be relying on hedging tools such as derivatives and futures to produce the same result.

The strategy appears to be legitimate. There's no mention of market-timing in the sales material for Corneille. The fund's documentation goes out of its way to note that it "has profiled a group of international mutual funds, which it intends to hold perpetually."

By contrast, the offering statements for many market-timing hedge funds made no secret that they intended to engage in the frequent trading of mutual fund shares.

Several former mutual fund market-timers say they are unaware of any other hedge fund that's attempting to do what Kismet seeks to achieve with Corneille. Many were skeptical the strategy could work and match the high double-digit annual returns that many timing hedge funds generated before the investigation.

Through June, Kismet was telling investors that Corneille and its sister offshore fund, located in the Cayman Islands, was up 3% for the year. Over that same stretch, the

S&P 500

, the index Kismet uses as a benchmark, was down 1%.

Kismet projects that if the fund had been in operation for all of last year, it would have posted a return on investment of 16%.

A few former timers expressed surprise that O'Meally, a person who has been linked to the trading scandal, would want anything to do with mutual funds. In fact, one former timer said his hedge fund won't invest in mutual funds now because of all the regulatory heat.

Of course, market-timing, even in the wake of the investigation, has never been judged illegal in a court. Securities regulators used the threat of litigation to crack down on market-timers who either used deception to conceal their activities from mutual fund companies, or negotiated under-the-table deals with mutual fund executives. (Most mutual funds discourage the rapid trading that goes with market-timing because it creates excessive costs and dilutes returns.)

O'Meally, who has not worked in the brokerage industry since leaving Prudential, could not be reached for comment. His home in Bay Shore, N.Y., which shares the same Long Island address as Kismet, has an unlisted phone number. His attorney, Peter Fleming, declined to comment. An email sent to O'Meally's attention at Kismet was not replied to.

Also declining to comment was Mark Arnold, the managing member of Kismet. "What would be the purpose of me talking to you?" Arnold said.

Like O'Meally, Arnold is no stranger to mutual fund timing. Back in February 2004, while Arnold was setting up Kismet, he also was in the process of winding down the operations of

Atlantique Capital Advisors

, a onetime $200 million timing hedge fund that he used to manage.

Earlier this year, Massachusetts regulators charged that

AG Edwards'

( AGE) brokerage office in Boston used deceptive techniques to conceal its market-timing trades for several hedge funds, including Atlantique.

One of the founders of Atlantique was former

Oppenheimer

(OPY) - Get Report

broker Michael Sassano, a close friend of O'Meally, and one of Wall Street's most successful market-timing brokers. A week ago, Sassano and his 10-member team were implicated, but not charged, in a $125 million civil settlement between the

Canadian Imperial Bank of Commerce

(BCM) - Get Report

and federal and state regulators. CIBC used to own Oppenheimer, which is no relation to Oppenheimer Funds.

New York Attorney General Eliot Spitzer, in his office's settlement with CIBC, alleged that Sassano and his family invested in Atlantique and claimed the hedge fund received financing for its market timing trades from CIBC.

While there's no indication that Sassano is an investor in Kismet or had a hand in its formation, the similarities between it and Atlantique are striking.

The local administrator of Corneille's offshore fund in the Cayman Islands is

CIBC Bank & Trust

. The CIBC division served in a similar capacity to Atlantique's offshore fund. A CIBC spokesman declined to comment.

The original address for Kismet was the same Garden City, N.Y., office that Atlantique used to call home.

TheStreet.com

previously reported that O'Meally, in a 2004 interview with the

Securities and Exchange Commission

, testified that Atlantique was one of his customers, according to a person who has seen a copy of the deposition transcript.

There's another curious element that Kismet and Atlantique share in common. Both are the names of towns on Fire Island, a summer resort community, located off New York's Long Island. Corneille happens to be the name of another Fire Island town.

Sassano, at one time, owned a beach house in Atlantique, people say.