Section 3:567 - Custodial accountsA. Applicability. The provisions of this Section shall apply to all sales of livestock through market agencies.B. Accounts. Each market agency shall establish and maintain a separate bank account designated as "Custodial Account for Shipper's Proceeds" or by some similar identifying designation, under terms and conditions with the bank where established, to disclose that the depositor is acting as a fiduciary with respect thereto and that the funds in the account are trust funds.C. Trust funds. Each payment made by a livestock buyer to a market agency is a trust fund until the market agency's custodial account has been paid in full in connection with such purchase. Funds deposited in a custodial account are also trust funds, under both the gross proceeds and net proceeds methods of maintaining the custodial account. The market agency is a fiduciary with respect to the custodial account.D. Deposits. (1) Gross proceeds method. Under the gross proceeds method, before the close of the next banking day after livestock is sold, the market agency shall deposit in its custodial account the proceeds from the sale of livestock that are collected and received on the day of sale, and an amount equal to the proceeds receivable from the sale of livestock that are due from the market agency; any owner, officer, or employee of the market agency; or any buyer to whom the market agency has extended credit. On or before the seventh day following the sale of livestock the market agency shall deposit in the custodial account an amount equal to all the proceeds receivable from the sale of livestock, whether or not such proceeds have been collected or received by the market agency.(2) Net proceeds method. In lieu of the gross proceeds method, any market agency may adopt, and thereafter continuously follow, a net proceeds method for making deposits in its custodial account. Under the net proceeds method, the market agency shall make the same deposits at the same time as required under the gross proceeds method, but shall retain and not deposit the marketing charges which are due the market agency.E. Withdrawals. The custodial account shall be drawn on only for payment of the net proceeds to the consignor or shipper, or such other person or persons who the market agency has knowledge are entitled thereto, to pay all legal charges against the consignment of livestock which the market agency may, in its capacity as agent, be required to pay for and on behalf of the consignor or shipper, and when the account is not kept on a net proceeds basis, to obtain therefrom the sums due the market agency as compensation for its services.F. Accounts and records. Every market agency shall keep such accounts and records as will at all times disclose the handling of the funds in the custodial account referred to in this Section, including without limitation such accounts and records as will at all times disclose the names of the consignors and the amount due and payable to each from funds in the Custodial Account for Shipper's Proceeds. These records shall be made available to the Louisiana Board of Animal Health under such rules and regulations as the board may provide.G. Insured banks. Custodial accounts required by this Section shall be established and maintained in banks whose deposits are insured by the Federal Deposit Insurance Corporation.H. Certificates of deposit. Any market agency which has established and maintains the separate custodial account referred to in this Section may invest, in certificates of deposit issued by the bank in which such account is kept, such portion of the custodial funds as will not impair the market agency's ability to meet its obligations to its consignors. Such certificates of deposit shall be made payable to the market agency in its fiduciary capacity as trustee of the custodial funds.I. Penalties. In addition to all other penalties provided in this Part, the board, as defined in Section 663 of this Chapter, may order the immediate closure of any market agency which fails to properly maintain the custodial account required by this Section.Added by Acts 1979, No. 153, §1; Acts 1985, No. 802, §1; Acts 2008, No. 920, §1, eff. July 14, 2008.Added by Acts 1979, No. 153, §1; Acts 1985, No. 802, §1; Acts 2008, No. 920, §1, eff. 7/14/2008.