Medallion Signature Guarantee
What Is a Medallion Signature Guarantee?
A medallion signature guarantee is a special certification used to verify the authenticity of a signature for certain financial transactions involving securities. It confirms that the person signing a document has the authority to transfer or sell the securities.
This guarantee is typically provided by banks, credit unions, or brokerage firms that participate in authorized medallion programs.
Why It Matters
A medallion signature guarantee helps prevent fraud in securities transactions. Because financial assets can be valuable, institutions require this verification to ensure that only authorized individuals can transfer ownership.
The guarantee protects both financial institutions and investors.
How a Medallion Signature Guarantee Works
The process typically involves:
- verifying the identity of the individual signing the document
- confirming their authority to transfer the securities
- applying a medallion stamp that guarantees the signature
Institutions issuing the guarantee assume financial liability if the certification is incorrect.
Example
An investor transferring physical stock certificates to a brokerage account may need to obtain a medallion signature guarantee before the transfer can be completed.
Medallion Signature Guarantee vs Notarization
- Medallion signature guarantees are used specifically for securities transfers.
- Notarization verifies a signature on legal documents but does not guarantee financial liability.
FAQs About Medallion Signature Guarantees
Where can someone obtain a medallion signature guarantee?
Banks, credit unions, and brokerage firms that participate in medallion programs.
Is notarization enough for stock transfers?
No. Many securities transfers require a medallion signature guarantee.
Why is the guarantee important?
It protects against fraudulent asset transfers.
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