Overview
A Medallion Signature Guarantee (commonly referred to as a Medallion Stamp) is a special certification used to verify the identity and authority of a person signing important financial documents, particularly those involving the transfer of securities like stocks and bonds.
Think of it as a super-powered notarization specifically for financial transactions. While a regular notary public verifies your identity for general documents, a medallion signature guarantee goes much further — it protects all parties involved in a securities transfer by guaranteeing that:
- The signature is genuine
- The signer has the legal authority to sign
- The signer has the legal capacity to sign
The financial institution providing the medallion guarantee accepts liability for any forgery, making this one of the most secure forms of signature verification in the financial world.
Signature Guarantees
A signature guarantee verifies the signature of a person making a request to transfer physical certificates of financial instruments such as securities like stocks. It is a form of authentication provided by financial institutions to prevent fraud, speed the legal transfer of securities, and protect transfer agents from the legal consequences of a fraudulent signature. Signature guarantees can only be provided by members of official securities guarantee programs like Medallion. A signature guarantee with medallion stamp is called a Medallion Stamp Guarantee.
When You Need a Medallion Signature Guarantee
You’ll typically need a medallion signature guarantee when:
- Transferring stocks, bonds, or mutual funds from one owner to another
- Changing the name on a securities account due to marriage, divorce, or legal name change
- Adding or removing an owner from an investment account
- Settling an estate that includes securities
- Transferring securities from a deceased person’s account to beneficiaries
- Converting physical stock certificates to electronic form
Why Transfer Agents Require Medallion Guarantees
Transfer agents are responsible for maintaining accurate records of who owns securities. They require medallion guarantees to protect against fraudulent transfers. Without this protection, anyone could forge a signature and steal someone’s investments. The medallion guarantee shifts the liability for any fraudulent transfer from the transfer agent to the guarantor institution.