An in-depth look at what a Medallion Signature Guarantee is, its significance, how it validates security transfers, and where to obtain one.
A Medallion Signature Guarantee is a special certification stamp that guarantees a signature authorizing an authentic transfer of securities. This guarantee is predominantly used in financial and investment sectors to ensure the legitimacy of transactions involving stocks, bonds, and other securities.
A Medallion Signature Guarantee is a certificational validation provided by financial institutions, like banks, credit unions, and certain brokerage firms. It certifies that the signature authorizing a security transfer is genuine, protecting against forgery or unauthorized transactions.
The stamp ensures that the financial institution takes responsibility for verifying the identity of the signer and guarantees that the signer has the legal authority to initiate the transaction.
STAMP (Securities Transfer Agents Medallion Program):
Securities Exchange Medallion Program (SEMP):
NYCE’s (New York Stock Exchange) Medallion Guarantee Program (NYSE MGP):
Limitations of Coverage: Each Medallion stamp carries a surety limit that defines the maximum value of the securities it guarantees. It’s essential to ensure the value of the transaction does not exceed the surety limit.
Specific Institutions: Only select financial institutions are authorized to issue Medallion Signature Guarantees. It’s important to contact your bank or credit union to verify their participation.
Stock Transfers: When transferring ownership of stocks from one person to another, a Medallion Signature Guarantee is required to validate the transaction.
Mutual Fund Redemptions: Redeeming mutual fund shares often requires a Medallion Signature Guarantee to prevent fraud.
Bond Certification: When certifying the transfer of bonds, the guarantee serves as proof of authenticity and authorization.
Many banks and credit unions offer Medallion Signature Guarantees to their customers. It is advisable to contact your local branch to ensure the service is provided and to understand any applicable fees.
Some brokerage firms can provide Medallion Signature Guarantees, especially if you hold an account with them. This service may be free of charge for account holders.
Notary Public: Unlike a Medallion Signature Guarantee, a notary public witnesses the signing of documents without certifying the authenticity of a securities transaction.
Signature Guarantee: A broader term that includes various types of guarantees beyond the Medallion Signature Guarantee, often used for non-securities transactions.