A Medallion Signature Guarantee is a special certification stamp that authenticates the signature authorizing the transfer of securities. This becomes essential when an owner wants to sell or transfer securities—including stocks or bonds—held in physical certificate form. Those holding securities through a broker generally do not need a Medallion Signature Guarantee for such transfers.
Key Takeaways
- A Medallion Signature Guarantee assures that an authorized signature for transferring securities is genuine.
- Only institutions that are members of one of three Medallion signature guarantee programs can provide this service.
- Customers can typically obtain a Medallion Signature Guarantee from a financial institution where they have an existing relationship.
- This guarantee is generally required when dealing with physical certificates, although most investors today prefer electronic records.
How Medallion Signature Guarantees Work
To issue a Medallion Signature Guarantee, an institution must be part of one of the following programs: the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP), or the New York Stock Exchange Medallion Signature Program (MSP).
Typically, you can get a Medallion Signature Guarantee from your bank or credit union. Some may charge a nominal fee that ranges from $0 for established customers to around $100 for assets valued up to $200,000. Institutions with on-site stamps can often provide the guarantee on the same day, though it may take between two to five business days if any requirements are outstanding.
Because the institution backs the certification using its assets, obtaining such a guarantee can be stringent. Major banks and financial institutions offering Medallion Signature Guarantees include:
- Chase
- Citi
- Capital One
- Merrill Lynch (Bank of America)
- Navy Federal Credit Union
- Northeast Credit Union
Common Reasons for Needing a Medallion Signature Guarantee
Medallion Signature Guarantees are generally required for:
- Gifting securities
- Moving securities from one account to another
- Transferring securities after the owner’s death
Medallion Signature Guarantee and Share Certificates
A Medallion Signature Guarantee is often linked with a share certificate—a document proving ownership of a certain number of a company’s shares. Unlike bonds, which represent a loan to a company or government, share certificates give holders equity in the entity.
Key elements of a share certificate usually include:
- Certificate number
- Company name and registration number
- Shareholder name and address
- Number of shares owned
- Class of shares
- Issue date
- Amount paid or treated as paid on the shares
Companies like Berkshire Hathaway, Ford, Meta (formerly Facebook), and Alphabet (Google’s parent company) offer shares in different classes, each conferring distinct rights regarding dividends and voting. If the document is damaged, lost, or stolen, a replacement may be issued by returning the damaged certificate.
Today, most individual investors prefer managing their shares electronically rather than holding physical certificates.
Which Banks Offer Medallion Signature Guarantees?
While many U.S. banks offer Medallion Signature Guarantees, availability can vary by branch. Major institutions like Bank of America, Chase, and Capital One do provide these guarantees. However, if an on-site reviewer is unavailable, documents may need to be sent for verification.
How Long Is a Medallion Stamp Good for?
The Medallion Stamp is generally considered valid only for the date it is signed.
How Much Does It Cost to Get a Medallion Signature?
Costs for obtaining a Medallion Signature Guarantee vary; institutions may offer it for free to established customers, while others may charge between $50 and $100, depending on the asset’s value.
Why Is a Medallion Signature Guarantee So Hard to Get?
Because Medallion Signature Guarantees expose financial institutions to risks, they are cautious in issuing them and typically restrict services to well-established customers.
The Bottom Line
A Medallion Signature Guarantee validates the identity and signature for transferring securities or investments. Issuing institutions must belong to one of three approved programs, ensuring increased security for the transactions they guarantee. Due to the risk involved, financial institutions are cautious when providing these guarantees. Medallion Signature Guarantees are primarily needed for gifting securities, transferring assets upon an owner’s death, or moving assets between accounts.
Related Terms: securities transfer, brokerage, financial certification, stock ownership, bond certification.
References
- U.S. Securities and Exchange Commission. “Medallion Signature Guarantees: Preventing the Unauthorized Transfer of Securities”.
- Bank of America. “Medallion Signature Guarantee”.
- Notary. “The Difference Between a Medallion Signature Guarantee Stamp and a Notary”.
- Medallion Signature Guarantee Website. “Lookup”.
- Berkshire Hathaway. “Comparison of Berkshire Hathaway Inc. Class A and Class B Common Stock (Memo, February 2, 1999)”.
- U.S. Securities and Exchange Commission. “Meta Platforms, Inc., Schedule 14A Information, Definitive Proxy Statement, 2023”. Page 67.
- Ford Motor Company. “Notice of 2023 Virtual Annual Meeting of Shareholders and Proxy Statement”. Pages 20, 88.
- U.S. Securities and Exchange Commission. “Alphabet, Inc., Schedule 14A, Definitive Proxy Statement, 2023”. Pages 39-40.
- Financial Industry Regulatory Authority. “Stocks: Types”.
- U.S. Securities and Exchange Commission. “Lost or Stolen Stock Certificates”.
- Notary Trainer. “Medallion Signature Guarantee”.
