[Code of Federal Regulations]
[Title 9, Volume 2]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 9CFR201.42]

[Page 13]
 
                  TITLE 9--ANIMALS AND ANIMAL PRODUCTS
 
  CHAPTER II--GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION 
       (PACKERS AND STOCKYARDS PROGRAMS),DEPARTMENT OF AGRICULTURE
 
PART 201_REGULATIONS UNDER THE PACKERS AND STOCKYARDS ACT--Table of Contents
 
Sec. 201.42  Custodial accounts for trust funds.

    (a) Payments for livestock are trust funds. Each payment that a 
livestock buyer makes to a market agency selling on commission is a 
trust fund. Funds deposited in custodial accounts are also trust funds.
    (b) Custodial accounts for shippers' proceeds. Every market agency 
engaged in selling livestock on a commission or agency basis shall 
establish and maintain a separate bank account designated as ``Custodial 
Account for Shippers' Proceeds,'' or some similar identifying 
designation, to disclose that the depositor is acting as a fiduciary and 
that the funds in the account are trust funds.
    (c) Deposits in custodial accounts. The market agency shall deposit 
in its custodial account before the close of the next business day (the 
next day on which banks are customarily open for business whether or not 
the market agency does business on that day) after livestock is sold (1) 
the proceeds from the sale of livestock that have been collected, and 
(2) an amount equal to the proceeds receivable from the sale of 
livestock that are due from (i) the market agency, (ii) any owner, 
officer, or employee of the market agency, and (iii) any buyer to whom 
the market agency has extended credit. The market agency shall 
thereafter deposit in the custodial account all proceeds collected until 
the account has been reimbursed in full, and shall, before the close of 
the seventh day following the sale of livestock, deposit an amount equal 
to all the remaining proceeds receivable whether or not the proceeds 
have been collected by the market agency.
    (d) Withdrawals from custodial accounts. The custodial account for 
shippers' proceeds shall be drawn on only for payment of (1) the net 
proceeds to the consignor or shipper, or to any person that the market 
agency knows is entitled to payment, (2) to pay lawful charges against 
the consignment of livestock which the market agency shall, in its 
capacity as agent, be required to pay, and (3) to obtain any sums due 
the market agency as compensation for its services.
    (e) Accounts and records. Each market agency shall keep such 
accounts and records as will disclose at all times the handling of funds 
in such custodial accounts for shippers' proceeds. Accounts and records 
must at all times disclose the name of the consignors and the amount due 
and payable to each from funds in the custodial account for shippers' 
proceeds.
    (f) Insured banks. Such custodial accounts for shippers' proceeds 
must be established and maintained in banks whose deposits are insured 
by the Federal Deposit Insurance Corporation.
    (g) Certificates of deposit and/or savings accounts. Funds in a 
custodial account for shippers' proceeds may be maintained in an 
interest-bearing savings account and/or invested in one or more 
certificates of deposit, to the extent that such deposit or investment 
does not impair the ability of the market agency to meet its obligations 
to its consignors. The savings account must be properly designated as a 
party of the custodial account of the market agency in its fiduciary 
capacity as trustee of the custodial funds and maintained in the same 
bank as the custodial account. The certificates of deposit, as property 
of the custodial account, must be issued by the bank in which the 
custodial account is kept and must be made payable to the market agency 
in its fiduciary capacity as trustee of the custodial funds.

(Approved by the Office of Management and Budget under control number 
0580-0015)

[47 FR 32696, July 29, 1982, as amended at 54 FR 26349, June 23, 1989; 
68 FR 75388, Dec. 31, 2003]

                          Accounts and Records