A former Morgan Stanley broker and investment advisor has been barred from the securities industry for allegedly stealing more than $58,000 from four customer accounts, according to a Securities and Exchange Commission administrative proceeding filing.
Chingyuan “Gary” Chang, who worked in the Cupertino, Calif., office of Morgan Stanley from February 2016 until his dismissal in August 2022, agreed to a permanent bar and a civil penalty of $58,560 in connection with the fraudulent sale of securities and defrauding his clients, the filing said.
According to the SEC, between September 2021 and June 2022, Chang took $58,560 from four investors through 40 unauthorized ACH withdrawals, sending the money to one of two accounts he held through online apps. In doing so, Chang exploited a loophole in Morgan Stanley’s system—the investment firm did not require separate client authorization when the withdrawals were initiated by the third-party apps.
In total, the 54-year-old advisor misappropriated more than $7,900 from the first client’s brokerage account, $5,800 from the second client’s brokerage account, more than $18,100 from the third client’s brokerage account and more than $26,700 from the fourth clients advisory and brokerage accounts, the SEC said.
According to the filing, sometimes Chang first sold securities in the accounts to conceal his misconduct. For example, in one case he sold $413,000 worth of mutual fund and stock shares before diverting $2,500 to his own account, the filing said.
In June 2022, Morgan Stanley began investigating Chang’s client accounts. Chang acknowledged he had taken the assets and in late July repaid Morgan Stanley to set the client accounts right, the filing said.
According to BrokerCheck, Chang first worked as a broker from 1997 to 1998 at PCI*Trade Securities. He then spent two years or less at eight other firms before joining Morgan Stanley.