In the
United States
The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
, a medallion signature guarantee is a special signature
guarantee
A guarantee is a form of transaction in which one person, to obtain some trust, confidence or credit for another, agrees to be answerable for them. It may also designate a treaty through which claims, rights or possessions are secured. It is to ...
used primarily when a client transfers or sells
US securities. It is an assurance by the financial institution granting the guarantee that the signature on the transaction is genuine and that the guarantor accepts
liability for any
forgery
Forgery is a white-collar crime that generally consists of the false making or material alteration of a legal instrument with the specific mens rea, intent to wikt:defraud#English, defraud. Tampering with a certain legal instrument may be fo ...
.
Guarantee
A medallion signature guarantee protects shareholders by preventing unauthorized transfers and possible investor losses. A medallion signature guarantee also limits the liability of the
transfer agent
A stock transfer agent, transfer agent, share registry or transfer agency is an entity, usually a third-party firm unrelated to security transactions, that manages the change in ownership of company stock or investment fund shares, maintains a ...
who accepts the certificates.
A medallion signature guarantee is a binding
warranty
In law, a warranty is an expressed or implied promise or assurance of some kind. The term's meaning varies across legal subjects. In property law, it refers to a covenant by the grantor of a deed. In insurance law, it refers to a promise by the ...
, issued by an agent of the authorized guarantor institution, that: (a) the signature was genuine; (b) the signer was an appropriate person to endorse, and (c) the signer had legal capacity to sign. A medallion signature guarantee is not equivalent to a
US notarial Acknowledgment.
Prefixes
Not all medallion signature guarantee stamps are of equal value. A special coded prefix is given to each stamp, and this prefix determines how much monetary value can be guaranteed. For instance if the medallion signature guarantee is required for US$400,000 worth of value, at least a C prefix is required, which is good for up to $500,000 value. If a D prefix stamp is submitted, the transaction will be rejected, because a D stamp is only good for guarantee up to $250,000.
Financial institutions' policies
Different institutions have various policies as to what type of identification they require to provide the guarantee and whether they charge a fee for such service, usually nominal. Very few guarantor institutions will guarantee the signature of a person who is not a known, established customer.
Prevalence
While some banks no longer provide this service, many still do so, as do some other financial institutions such as
savings and loan association
A savings and loan association (S&L), or thrift institution, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans. While the terms "S&L" and "thrift" are mainly used in the United States, ...
s (a thrift) and
credit union
A credit union is a member-owned nonprofit organization, nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts (che ...
s. These institutions may provide the medallion signature guarantee at their discretion. These institutions provide clarification on their requirements for providing the stamp. Each of these institutions may have different requirements for documentation necessary.
Outside the United States
When
United States citizens are outside the United States, they are typically unable to obtain a medallion signature guarantee stamp. Some financial institutions may accept the seal of a
United States embassy in its place if given prior notice of the substitution. US embassies are not financial institutions and do not provide Medallion Signature Guarantees.
In recent years, some companies in the UK have been approved to sign up to become guarantors, such as heir hunting companies, and law firms, like Lester Aldridge LLP.
History
The medallion signature guarantee program has existed since February 24, 1992, when Securities and Exchange Commission's Rule 17 Ad-15 went into effect.
[Doyle, Bill (April 24, 1994).]
Signature plan has many members
. ''Fort Worth Star-Telegram'' (Fort Worth, Texas). p. 49. The medallion signature guarantee program was implemented in order to protect investors, treat financial institutions equitably, increase the efficiency of transferring securities, and reduce risk.
Until then, financial institutions had cumbersome and inconsistent policies regarding certificates presented to a transfer agent to change ownership.
[
At the time of its establishment, there were three signature guarantee programs, namely the New York Stock Exchange Medallion Signature Program, the Stock Exchanges Medallion Program, and the Securities Transfer Agents Medallion Program, each of which were administered by different entities.Medallion Signature Guarantees: Preventing the Unauthorized Transfer of Securities]
. ''investor.gov''. U.S. Securities and Exchange Commission. Retrieved January 30, 2022.
References
* Piombino, Alfred E. (2011). ''Notary Public Handbook: Principles, Practices & Cases''. National Edition. East Coast Publishing.
*
. ''United States Securities and Exchange Commission''. Retrieved November 15, 2013.
External links
* Th
includes a directory of firms offering medallion signature guarantees.
* Th
Investor.gov websiteincludes information about Medallion Signature Guarantee Programs.
{{DEFAULTSORT:Medallion Signature Guarantee
Securities (finance)
Identity documents