Mo. Code Regs. tit. 2 § 60-5.070

Current through Register Vol. 49, No. 24, December 16, 2024

Section 2 CSR 60-5.070 - Certificates of Deposit

PURPOSE: This rule sets forth guidelines for the submission, acceptance, safeguarding, possible liquidation and return of a certificate of deposit that has been submitted in lieu of a Missouri grain dealer bond.

(1) A certificate of deposit (CD) issued by a bank or savings and loan association that is a member in good standing with the Federal Deposit Insurance Corporation or Federal Savings and Loan Insurance Corporation respectively, may be submitted to the Missouri Department of Agriculture in lieu of a Missouri grain dealer bond as required by sections 276.401-276.582, RSMo. The CD must be in an amount equal to the otherwise required bond.

(2) A CD shall have a term of no longer than one (1) year and shall be automatically renewable. However, the term of the CD may be for a period longer than one (1) year if the issuing bank states, in writing, that in the event the Missouri Department of Agriculture liquidates the CD, the bank will honor the request for liquidation and will not assess a penalty for early withdrawal (see 2 CSR 60-4.140 for certificate of deposit waiver of penalty).

(3) A CD submitted in lieu of a Missouri grain dealer bond shall be held in a safe-deposit box of a local bank or savings and loan association by the director of the Missouri Department of Agriculture who shall act as trustee for the benefit of all persons selling grain to the grain dealer as set forth in the Missouri Grain Dealer Law, sections 276.401-276.582, RSMo.

(4) All CDs shall be made payable or properly assigned to the Missouri Department of Agriculture as follows: Pay to the order of the director of the Missouri Department of Agriculture (see 2 CSR 60-4.140 for Certificate of Deposit Assignment Form). If a CD is assigned to the Department of Agriculture, written consent of the assignment must be received from the financial institution issuing the certificate. The director may make the necessary inquiries to determine that the certificate is negotiable and, if applicable, to confirm that the assignment of the CD to the Missouri Department of Agriculture has been approved by the financial institution issuing the CD.

(5) A CD assigned or purchased by a principal, shareholder, officer, employee or any other individual for or on behalf of a licensee shall disclose on its face the name of the licensee in whose favor the CD is deposited. The balance of any proceeds remaining after liquidation and disbursement shall be paid to the assignor or purchaser.

(6) In the event that a plurality of CDs from any number of sources are deposited in satisfaction of a licensee's bonding obligation, the director may satisfy claims arising under the Missouri Grain Dealers Law by liquidating any one (1) or more of these CDs without regard to proration.

(7) In the event that a licensee desires to substitute a bond for a CD then on deposit with the director of agriculture, the CD shall be retained by the Department of Agriculture for a period of ninety (90) days following the later of the effective date of the bond or the date the bond is received by the director. A substitute bond shall be considered as received or when a binding verbal commitment for a substitute bond has been accepted by the director. The director may retain the CD beyond ninety (90) days for such time as may be required to fully ascertain the existence of any claims. After that, the CD shall be returned to the purchaser. Should the maturity date be interposed during this transition period, the director, at the option of the licensee and upon its timely request, shall cause the CD to be liquidated and the proceeds be deposited in a passbook savings account for the duration of the transition period, when the funds shall be forwarded to the purchaser or assignor of the CD.

(8) A licensee shall be required to augment CD deposits in any situation where it would be required to increase its coverage under a bond; this augmentation shall be commensurate to the increased bond value required.

(9) All CDs liquidated by the Department of Agriculture pursuant to these rules may be redeemed by collection proceedings through a local bank or savings and loan association selected by the director.

(10) A CD may only be liquidated for disbursement upon the same reasons that bond proceeds may be demanded for disbursement and shall apply to all claims whenever arising.

(11) All interest earned on the CD is to be credited or paid directly to the purchaser of the CD, except in the event of liquidation for the purpose of paying claims, in which event interest attributed to the claim amounts shall be payable to claimants.

(12) If a licensee desires to surrender its license and requests the return of a CD to the purchaser, the licensee must return its grain dealer license and make written request by registered or certified mail with return receipt for return of the CD. Upon receipt of the written request and submission of the grain dealer license, the director shall hold the CD until the director is satisfied that no claims exist, which may include a minimum ninety (90)-day holding period, before the CD is returned to the purchaser.

(13) If a grain dealer license is revoked, the CD shall be held by the director for a period of one hundred twenty (120) days or until the director is satisfied that no claims against the licensee exist.

(14) In the event that a licensee desires to substitute a letter of credit for a CD, the director shall return the CD to the purchaser upon receipt and authentication of the letter of credit.

(15) In the event that the amount of the bond required under sections 276.401-276.582, RSMo decreases, a licensee may substitute a CD for the lesser amount; however, this substitution shall be made only at maturity of the CD in possession of the Department of Agriculture or at such time as approved by the director.

(16) If the decrease in bond requirement is due to an increase in net worth, a minimum ninety (90)-day holding period may be required from the date the improved net worth is accepted by the director.

2 CSR 60-5.070

AUTHORITY: sections 276.406(2) and 276.431, RSMo Supp. 1999.* Emergency rule filed April 15, 1986, effective April 25, 1986, expired Aug. 23, 1986. Original rule filed May 2, 1986, effective Aug. 25, 1986. Amended: Filed March 16, 1988, effective June 27, 1988. Amended: Filed Oct. 25, 1999, effective June 30, 2000.

*Original authority: 276.406, RSMo 1980, amended 1986, 1993, 1995; and 276.431, RSMo 1980 amended 1986, 1987.