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The Medallion Signature Guarantee: Ensuring Secure Transfers of Securities  

B. Elise
07.23.23 07:48 PM Comment(s)

In the world of finance, the transfer of securities is a common occurrence. Whether you're changing ownership of stocks, bonds, or mutual funds, it's crucial to ensure the authenticity and legitimacy of the transaction. This is where the Medallion Signature Guarantee comes into play. In this blog post, we will delve into the significance of the Medallion Signature Guarantee, shed light on its purpose, explain the legal requirements surrounding it, provide an overview of the process involved, and discuss recent developments in the regulations to keep notaries informed and up-to-date.

What is a Medallion Signature Guarantee?

A Medallion Signature Guarantee is a specialized service provided by financial institutions, such as banks and credit unions, as well as certain brokerage firms. It is a guarantee that the signature on a document authorizing the transfer of securities is genuine and that the individual signing the document has the legal authority to do so.

Purpose of a Medallion Signature Guarantee:

The primary purpose of a Medallion Signature Guarantee is to protect against unauthorized transfers of securities and to prevent fraud. By verifying the signature, financial institutions assume liability for any losses that may occur due to a fraudulent or unauthorized transfer. This provides reassurance to the receiving financial institution that the transfer is legitimate and protects the interests of all parties involved.

Legal Requirements:

The Medallion Signature Guarantee operates under specific legal requirements to ensure its effectiveness. In the United States, these requirements are outlined by the Securities and Exchange Commission (SEC) and the U.S. financial industry's self-regulatory organization, the Securities Transfer Association (STA). The STA has established three different Medallion Programs: the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP), and the New York Stock Exchange Medallion Signature Program (MSP).

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Recent Developments and Regulatory Changes:

In recent years, there have been several notable developments and regulatory changes surrounding Medallion Signature Guarantees. These changes aim to streamline the process and adapt to evolving technologies and customer needs. Notably, the SEC has allowed for the acceptance of electronic versions of Medallion Signature Guarantees, known as e-Medallions, which can be obtained through certain approved platforms. This move has introduced convenience and efficiency to the process, enabling individuals to obtain the required guarantees without physically visiting a participating institution.

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The Medallion Signature Guarantee is an essential service provided by financial institutions to ensure the secure transfer of securities. By verifying the authenticity of signatures, it acts as a safeguard against fraudulent transfers. Understanding the purpose, legal requirements, and process involved in obtaining a Medallion Signature Guarantee is crucial for both individuals and organizations involved in securities transactions. As regulations evolve, it's important for notaries and individuals to stay informed and adapt to changes to ensure compliance and security in the transfer of securities.

Original publish date 7/13/2023

B. Elise