The Associated Press April 10, 2003, (Lynn Cowan)

Attorney Mark Maddox makes his living pursuing stockbrokers who have done their clients wrong. So where does he turn when he needs help managing his own money?

Like many other investors, his broker worked for Salomon Smith Barney and believed every word that fallen star Jack Grubman uttered about the telecommunications industry – including the advice to hold Worldcom Inc. stock even as its price plunged.

“I had a pretty common Grubman experience,” said Maddox, an Indianapolis lawyer and a former Indiana securities commissioner. “I had a portfolio that was kind of heavy in technology, and it did really well for a while, then of course it came down. As I watched it go down, I talked to my broker, saying, shouldn’t I unload this stuff?”

His broker, an old high school friend, advised him not to, citing Grubman’s predictions that the stocks would come back. Worldcom is now in Chapter 11 bankruptcy reorganization.

Grubman, no longer at Salomon, is expected to pay $15 million and be barred from the securities industry for allegedly overvaluing stocks to help Salomon’s investment banking business. And Maddox has a new broker.

“I was one of those guys who held on to MCI Worldcom all the way down,” said Maddox, who last year won a $250 million punitive damage award against Prudential Securities Inc. in a class action suit involving a broker who sold all his clients’ holdings without their consent.

Attorneys who specialize in representing investors against brokerage firms spend their careers looking at the seamy side of Wall Street.

Some of them still find brokers they trust. Other successful securities attorneys say they don’t feel they can trust their money to a brokerage firm.

“I keep my money in a bank and a money market fund,” said Seth Lipner, a Garden City, N.Y., lawyer who won $3 million last year in an arbitration case that alleged a Merrill Lynch & Co. broker gave negligent stock options advice.

Lipner said his retirement money is in mutual funds, which he choses through Charles Schwab Corp.

Still, one of the sectors that he invests in through mutual funds is the financial services industry, the very industry he litigates against.

“Maybe it’s a hedge against my business. If they start doing well, maybe I won’t,” joked Lipner. “Or it’s a sport. Or I think they will come back. I mean, these guys are the brightest of the brightest, and they will find a way to make money.”

Andrew Stoltmann, a Chicago attorney, won a $4 million arbitration award against Stifel Financial Corp. last year for a case involving a broker who was jailed on wire fraud charges. Stoltmann worked as a broker at Merrill Lynch before he switched careers to pursuing brokers at arbitration.

He now manages his own account and his mother’s account, sticking mainly to index funds and long-term bonds.

“I definitely do not use a broker. Maybe that’s just because I worked with so many bad brokers,” Stoltmann said.