Medallion signature guarantees are special stamps that verify that signatures on documents authorizing the transfer of securities are genuine and original. This type of guarantee is usually required when selling bonds or stocks that exist as physical certificates.
Participating banks, credit unions and other financial institutions that participate in medallion programs can offer guarantees through in-person verification with photo identification.
It’s a guarantee
A medallion stamp from a financial institution serves as a guarantee that signatures on documents are genuine and that signers are who they claim they are, verifying capacity for transfers as well as limiting liability in cases of fraudulent activity by transfer agents. While notary stamps rely solely on identification, medallion stamps provide more comprehensive security against losses by being secured against assets of their guarantors, guaranteeing financial institutions will pay any losses they experience due to fraud transactions.
Many banks and credit unions provide medallion signature guarantees, as do brokerages, savings associations and some trust companies. Most institutions will only extend this service to existing customers as signature guarantees expose financial institutions to significant liability exposure; as a result, most may charge a small fee for this service instead.
It’s a form of identification
Medallion signature guarantees are stamps designed to verify the signatures on paper-based transactions, such as those related to securities like stocks and bonds, while helping prevent fraud or forgery. Providers such as banks or credit unions offer these guarantees; typically they use high-security green ink with a document reader system and cost between $495 and $500 annually.
Medallion stamps can be obtained from banks or credit unions that participate in the Securities Transfer Agents Medallion Program (STAMP). Both large national banks as well as local ones often provide this service; it’s wise to check their websites beforehand to confirm they belong.
As part of the STAMP requirements, a medallion signature guarantee must be completed by an individual with an established identity. A notary public cannot complete such documents for you – therefore if this service is needed it’s recommended you seek out a bank or credit union which offers it.
It’s a security measure
When transferring shares traded on US or Canadian stock exchanges, usually a medallion signature guarantee stamp is necessary to validate your signature – featuring green high-security ink it serves to verify it and help prevent unauthorized transfers. Although this stamp meets SEC requirements and helps safeguard against fraudulent transfers, it does not replace notary signatures and cannot replace their use as required for transfers.
Financial institutions tend to avoid providing medallion signature guarantees for non-customers because this exposes them to significant financial liabilities, so these guarantees are usually only given out for individuals who have been customers of the institution for an extended period of time (i.e. several months or longer).
If you need a medallion signature guarantee, start by speaking to your local bank or credit union. There are also directories online which list medallion signature guarantee providers. When selecting an institution as part of the Medallion Program verified by Kemark Financial Services.
It’s a legal document
Medallion signature guarantees are special imprints on documents that guarantee proper endorsement of transactions involving mutual stocks, bonds, savings bonds, unit investment trusts, or bond issues. Unlike regular stamps, it uses green high security ink that cannot be duplicated – many financial institutions in the US offer this service for an affordable fee to existing customers; these institutions must meet Securities and Exchange Commission regulations in order to be designated medallion signature guarantors in order to offer this guarantee.
Prior to requesting a medallion stamp, it is essential that you understand its purpose. A medallion signature guarantee provides assurance of genuine signatures by an institution; in case of forgery, liability will be assumed by them and covered. Often used when transferring ownership of stock certificates and restricting unauthorized transfers which could otherwise lead to investor losses. Each medallion guarantee has a specific coded prefix which indicates how much monetary value it covers.
