• What is a Medallion Guarantee?

What is a Medallion Guarantee?

A medallion guarantee, also referred to as a medallion signature guarantee, is used when buying or selling physical stock and bond certificates. A medallion guarantee is used to prove that the stock or bond owner has the right to sign over his/her rights to the assets being sold. A medallion guarantee may also be used to change ownership of an investment account such as when transferring stocks or government bonds into a trust.

The medallion signature protects the following:

  • An existing shareholder’s interest in the physical security instrument by reducing the likelihood of the asset being stolen;
  • The transfer agent’s liability because a medallion is used to guarantee the signature of the owner; and
  • The purchaser of shares because it provides a guarantee that the purchase is legitimate.

In short, the medallion guarantee is the issuing financial institution’s certification that a signature regarding the sale or transfer of a security instrument is authentic. Sometimes this may be required when transferring securities into a living trust.

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A medallion guarantee is commonly confused with functions performed by a notary. The medallion signature guarantee is different than a notarized signature. A notary public receives a license from the state to perform his/her duties. A financial institution can appoint a notary to perform medallion guarantees on its behalf. A notary can issue a medallion guarantee if he/she is a certified participant in a financial institution’s medallion signature. A financial institution may charge a small fee for issuing a medallion guarantee.

How to Get a Medallion Guarantee

You can get a medallion signature guarantee from a local bank or brokerage firm (most financial institutions restrict the medallion guarantee to existing customers). Medallion guarantees can only be authorized by one of three medallion signature guarantee programs:

  • Securities Transfer Agents Medallion Program
  • Stock Exchange Medallion Program
  • New York Stock Exchange Medallion Signature Program

A financial institution must belong to one of the above three groups to issue a medallion signature guarantee. If the financial institution is not a member of a medallion guarantee program, it is unauthorized to provide a signature guarantee. Institutions that participate in the program guarantee customer signatures with the assurance that their guarantee will be immediately accepted for processing.

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By |2018-01-18T15:46:29+00:00January 15th, 2017|Estate Planning, Miscellaneous|0 Comments

About the Author:

Sandra M. McCarthy, founder of A People’s Choice Inc., has worked exclusively in the legal field since 1976. She served as the 2004-2005 President of CALDA (California Association of Legal Document Assistants). She obtained a Paralegal Certificate from the University of California, Santa Barbara. During her career in the legal field, she has worked as a freelance paralegal, law office manager and paralegal studies teacher, and has co-authored numerous legal publications and written hundreds of self-help legal articles. As a registered Legal Document Assistant, Sandy is dedicated to providing affordable, low-cost, self-help document preparation services for California consumers in all 58 counties.

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