Medallion Signature Guarantee
Medallion signature guarantees are essential when transferring securities or investments, usually issued by banks, credit unions or brokerage firms. They serve as verification of identity of signer while guaranteeing signature on document; additionally they help limit liability of stock transfer agent.
Most institutions only provide signature guarantees if an individual is an existing customer; so, to secure one successfully it is wise to plan in advance and give yourself plenty of time.
It’s a security
The Medallion Signature Guarantee stamp from a financial institution serves to verify your signature is authentic. Printed in green ink that makes forgery difficult, this stamp should be placed next to your signature on any form or document related to a transaction and verified as such by financial institution personnel. They’ll also verify you as who they say you are as well as own any assets being transferred over.
Note that signature guarantees can only be provided by bank and financial institution personnel who have undergone special training to provide this service, and who have joined an approved program with a certain surety limit set by them.
Before entering into any transaction with any institution, it is wise to research their policies and forms requirements. While some banks, savings and loan associations, and credit unions may charge a nominal fee for this service, others offer this as part of their offerings such as banks.
It’s a guarantee
Medallion signature guarantees are special stamps used to limit transfer agent’s liability in case of forgery of financial documents, issued by banks, brokerage firms, and credit unions. Each guarantee comes with its own coded prefix indicating its maximum cover value – for instance one with C prefix can cover transactions up to $500,000.
Due to the associated high costs and risks, banks do not typically issue medallion signature guarantees to just anyone; typically this service is offered exclusively to established clients who pay a nominal fee for it. Some situations requiring this type of guarantee could include moving 401(k) assets between brokerage accounts, giving securities as gifts for children or nonprofit corporations, or transferring ownership in case of death.
It’s a legal document
Though they may appear similar, medallion signature guarantees differ significantly from notary stamps in that they verify the identity and ability to sign legal documents by validating who signed them, and guaranteeing they can complete a transaction they’re undertaking. They are usually provided by banks or financial institutions belonging to one of several Medallion signature guarantee programs; their certification can also be used to validate signatures on stock power or endorsed stock certificates.
Banks, credit unions, savings and loan associations and brokerage firms that participate in Medallion signature guarantee programs typically provide this service; however they will typically not issue stamps directly to anyone off the street as doing so would expose them to significant liabilities and risks.
There are online resources that can assist in finding banks or credit unions offering medallion signature guarantees at reasonable costs. Most services charge only a nominal fee for this service.
It’s a good investment
A medallion signature guarantee is issued by a financial institution to verify the signature on a certificate of ownership, used by transfer agents and brokers to verify ownership identity and limit their liability, while helping prevent unapproved transfers and fraud.
Medallion signature guarantees can be found from many banks; however, not all branches offer them due to the exposure they pose and associated liabilities that make them expensive compared to alternatives; hence they are typically only provided to established clients.
The Securities Transfer Agents Medallion Program (STAMP) and Stock Exchange Medallion Program are two medallion signature guarantee programs offered by Kemark Financial Services and paid for by transfer agents that use them. Each program has a coded prefix which specifies its maximum guarantee value; this number can be seen displayed prominently on each stamp’s front face.