Medallion signature guarantee
Encyclopedia
In the United States
, a medallion signature guarantee is a special signature
guarantee for the transfer of securities
. It is a guarantee by the transferring financial institution
that the signature is genuine and the financial institution accepts liability
for any forgery. Signature guarantees protect shareholder
s by preventing unauthorized transfers and possible investor
losses. They also limit the liability of the transfer agent
who accepts the certificates.
Different institutions have different policies as to what type of identification they require to provide the guarantee and whether they charge a fee for such service (usually nominal if any.) Most institutions will not guarantee a signature of someone who has not already been their customer.
A medallion signature guarantee is not the same as an acknowledgment by a notary public
, in the sense that a "signature guarantee" is a certification by the institution that the signature is authentic, and an acknowledgment is a certification by a notary public attesting that the signer signed a document voluntarily.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, a medallion signature guarantee is a special signature
Signature
A signature is a handwritten depiction of someone's name, nickname, or even a simple "X" that a person writes on documents as a proof of identity and intent. The writer of a signature is a signatory. Similar to a handwritten signature, a signature work describes the work as readily identifying...
guarantee for the transfer of securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...
. It is a guarantee by the transferring financial institution
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...
that the signature is genuine and the financial institution accepts liability
Legal liability
Legal liability is the legal bound obligation to pay debts.* In law a person is said to be legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. See Strict liability. Under English law, with the passing of the Theft...
for any forgery. Signature guarantees protect shareholder
Shareholder
A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....
s by preventing unauthorized transfers and possible investor
Investor
An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc...
losses. They also limit the liability of the transfer agent
Transfer agent
Public companies typically use transfer agents to keep track of the individuals and entities that own their stocks and bonds. Most transfer agents are banks or trust companies, but sometimes a company acts as its own transfer agent....
who accepts the certificates.
Different institutions have different policies as to what type of identification they require to provide the guarantee and whether they charge a fee for such service (usually nominal if any.) Most institutions will not guarantee a signature of someone who has not already been their customer.
A medallion signature guarantee is not the same as an acknowledgment by a notary public
Notary public
A notary public in the common law world is a public officer constituted by law to serve the public in non-contentious matters usually concerned with estates, deeds, powers-of-attorney, and foreign and international business...
, in the sense that a "signature guarantee" is a certification by the institution that the signature is authentic, and an acknowledgment is a certification by a notary public attesting that the signer signed a document voluntarily.