Financial Adviser Loses License Over Funeral Trust Fund Losses

August 26, 2009
Advertisement

image A Merrill Lynch financial adviser in Springfield has temporarily lost his state license, as Illinois regulators continue to investigate investment losses in a $300 million trust fund that held consumer deposits for pre-paid funeral agreements.

The Illinois Secretary of State suspended Edward L. Schainker on Feb. 24, charging that he violated state securities laws in his role as an investment adviser to the Illinois Funeral Directors Association.

Calls to Schainker’s Springfield office and his attorney, Carl Draper of Springfield, were not immediately returned.

A Merrill Lynch spokesman declined to comment on Schainker’s suspension but said the company is cooperating with the state officials and will continue to do.

Advertisement

The IFDA is under investigation after the trust it controlled had a deficit of more than $50 million last year. More than 49,000 Illinois residents have accounts in the trust to pay for their funerals in the future. Because of the deficit, some consumers may have pay more for their services when they thought no other funds would be necessary.

As part of their investigation, regulators are looking into insurance policies that make up the bulk of the trust’s investments. The policies have severely impaired the liquidity of the trust, according to the Department of Financial and Professional Regulation.

The secretary of state said Schainker recommended and sold more than 300 insurance contracts to the IFDA, including more than 120 policies issued by a Merrill Lynch affiliate. Schainker received a commission for each sale, the suspension order said.

The order also alleges that Schainker’s recommendation of the insurance policies was “unsuitable” for the trust and violated state securities laws.

Under the order, Schainker is prohibited from acting as an investment adviser or selling securities. He has been registered as broker with Merrill Lynch since March 1, 1983, according to Financial Industry Regulatory Authority Inc.

The State Journal-Register in Springfield first reported Schainker’s suspension.

Schainker and Merrill Lynch were named as defendants in a lawsuit filed in January by six Illinois funeral directors, accusing current and former officers of the IFDA of mismanaging the trust.

Article By: asachdev@tribune.com

CDFuneralNews

CDFuneralNews

ConnectingDirectors.com is the leading online daily publication for funeral professionals with a reader base of over 45,000 of the most elite and forward-thinking professionals in the profession. With ConnectingDirectors.com we have created a global community through an online platform allowing funeral professionals to Stay Current. Stay Informed and Stay Elite.
CDFuneralNews
Advertisement

You may be interested

BEAN TOWN BREAK DOWN | FUNERAL hustle 015
FUNERAL Hustle
134 views
FUNERAL Hustle
134 views

BEAN TOWN BREAK DOWN | FUNERAL hustle 015

CDFuneralNews - November 14, 2017

Ryan is exposed EXPOSED as a terrible (.....) in FUNERAL hustle 015! Part 2 of our Boston NFDA recap we…

NFDA Goes Big In Boston
Funeral Industry Press Releases
87 views
Funeral Industry Press Releases
87 views

NFDA Goes Big In Boston

CDFuneralNews - November 14, 2017

Brookfield, Wis. – The National Funeral Directors Association (NFDA) 2017 International Convention & Expo, held October 29 through November 1…

2017 REFLECTION OF NFDA BOSTON AND A TRIBUTE TO THE VETERANS | FUNERAL nation 094
FUNERAL Nation
236 views
FUNERAL Nation
236 views

2017 REFLECTION OF NFDA BOSTON AND A TRIBUTE TO THE VETERANS | FUNERAL nation 094

CDFuneralNews - November 13, 2017

On this episode, we send a big "thank you" to our very own Funeral Commander, Jeff Harbeson in honor of…

Comments