Medallion Stamp Program: Guaranteed Signature Verification

August 25, 2024 4 min read Finance Banking Investments Medallion Stamp Program Security Signature Guarantee Securities Transfer Financial Institutions

The Medallion Stamp Program is an initiative approved by the Securities Transfer Association that enables participating financial institutions to guarantee signatures on stock certificates or stock powers, ensuring authenticity and reducing fraud.

On this page

The Medallion Stamp Program is an initiative authorized by the Securities Transfer Association (STA) that facilitates participating financial institutions to guarantee signatures on stock certificates or stock powers. This program ensures that the individual signing the certificate or stock power is indeed the registered owner, as stipulated on the stock certificate or stock power. A variety of U.S. financial institutions, such as banks, savings and loan associations, credit unions, and U.S. stock brokerage firms, participate in the Medallion Stamp Program to provide these guarantees.

Benefits and Importance of the Medallion Stamp Program

Guaranteeing Signature Authenticity

One of the primary benefits of the Medallion Stamp Program is the authentication it provides. By ensuring that signatures on stock certificates or stock powers are genuine, the program substantially reduces the risk of fraud.

Facilitating Secure Transactions

By verifying the identity of the signer, the Medallion Stamp Program helps facilitate secure transactions in financial markets. Whether transferring stock ownership or engaging in other securities-related activities, the program ensures trust and security.

Protecting Financial Institutions

Financial institutions participating in the Medallion Stamp Program are held to high standards, thus protecting them from potential liabilities associated with fraudulent transactions.

How Does the Medallion Stamp Program Work?

Eligibility of Institutions

Any U.S. financial institution that belongs to a Medallion Stamp Program can provide Medallion guarantees. These institutions include:

Banks
Savings and Loans
Credit Unions
U.S. Stock Brokerage Firms

Guarantee Procedure

When an individual needs a signature guarantee, they must visit a participating financial institution. The institution will then verify the identity of the signer against the information recorded on the stock certificate or stock power. Once confirmed, the institution places a medallion stamp on the document, indicating the signature guaranteed status.

Historical Context

The Medallion Stamp Program was developed following increasing incidents of securities fraud, which highlighted the need for a more secure and standardized method of authenticating signatures on securities. The STA, in collaboration with key financial institutions, established the program to mitigate these risks and enhance the integrity of the securities transfer process.

Applicability

Securities Transfer

The most common application of the Medallion Stamp Program is in the transfer of securities ownership. By guaranteeing the signatures on stock certificates or stock powers, the program ensures that the claimed transactions are legitimate and conducted by authorized parties.

Estate Settlements

In cases where securities form part of an estate, the Medallion Stamp Program plays a crucial role in verifying the signatures of beneficiaries or executors, ensuring undisputed transfer of ownership.

Notary Public vs. Medallion Guarantee

Notary Public: While a notary public also verifies the identity of signers, a notary does not verify ownership of securities. A notary public’s role extends to various types of documents, beyond financial instruments.
Medallion Guarantee: This specifically pertains to the financial sector, focusing on verifying ownership of securities.

Signature Guarantee

A broader term encompassing various forms of signature verification, of which the Medallion Stamp Program is a specific and highly trusted subset.

FAQs

Can I get a Medallion signature guarantee at any bank?

Only financial institutions that are part of the Medallion Stamp Program can provide these guarantees. It is recommended to check with your bank to confirm its participation.

Is a medallion signature guarantee required for all stock certificate transfers?

It is generally required for transactions involving physical stock certificates to ensure the authenticity of the signature and the security of the transaction.

What documents do I need to obtain a Medallion signature guarantee?

Typically, you will need valid identification and proof of ownership of the securities. Specific requirements may vary by institution.

References

Securities Transfer Association. (n.d.). Medallion Signature Guarantee Program. Retrieved from STA Website.
U.S. Securities and Exchange Commission. (n.d.). Security Ownership Transfers. Retrieved from SEC Website.

Summary

The Medallion Stamp Program is a crucial initiative in the securities transfer process, providing a reliable means to verify the authenticity of signatures on stock certificates and stock powers. By involving a range of financial institutions and adhering to stringent verification processes, the program plays a vital role in preventing fraud and ensuring secure transactions within the financial sector.