If you hold securities in certificate form or in electronic book entry form (held at your broker or transfer agent) and you want to transfer or sell them, you will need to sign the back of the stock certificate or sign the related stock power forms.
At this point, you will need to obtain a medallion signature guarantee. In the U.S. 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. You may also need a medallion signature guarantee if you’re gifting shares, changing ownership on an investment account, moving a 401k account to another institution or when handling the estate of a deceased family member. In most, if not all of these scenarios, you will likely need to get your signature “guaranteed” with a medallion stamp before a transfer agent will accept the transaction. Although it’s an inconvenience to get your signature guaranteed, the process protects you by limiting the chances of having someone forge your signature on your securities certificates or related documents.
A guarantee of a person’s signature is required by all Transfer Agents before a security transfer can take place and SEC Rule 17Ad-15 requires that Transfer Agents adopt an equitable methodology for the acceptance of signature guarantees from eligible Guarantor institutions.
It is a common misconception to think that a notary stamp is sufficient when transferring securities. Don’t be mistaken – a medallion signature guarantee is not the same as a notary service and neither one serves as a substitute when a document requires the other. A medallion guarantee is a lime green colored bar code placed on the paper from a customized stamp which has a security feature utilizing special green pigmented ink and an invisible security compound that is only detectable using special reader technology.
An investor can normally obtain a signature guarantee from a financial institution – such as a commercial bank, savings bank, credit union, or broker dealer – that participates in one of the three Medallion signature guarantee programs: the Securities Transfer Agent Medallion program, the Stock Exchanges Medallion Program and the New York Stock Exchange Medallion Signature Program. If a financial institution is not a member of a recognized Medallion Signature Guarantee Program, it would not be able to provide the required signature guarantees. eSignatureGuarantee.com is a proud member of the Securities Transfer Agents Medallion Program.
Historically, shareholders have tried to obtain a medallion signature from the banking institution that they transact business with. If you are not a customer of a participating financial institution, it is likely the financial institution will not guarantee your signature. Moreover, if you desire to open an account immediately with a bank, they will often require that you are a customer of their bank for at least a six month period before they will provide you with medallion services. Recently, some banks and retail branches have announced that they will no longer provide medallion stamps even to their existing customers. As such, finding a bank to provide a medallion signature has become a bit more challenging, to say the least. With limited options to obtain a medallion signature from your bank or broker, we hope that our online, patent pending technology platform will offer much needed relief to those seeking a medallion signature solution thereby allowing you to transfer your securities.
