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A Medallion signature guarantee is an assurance from the guarantor that the signature of the transferor of securities is genuine and the financial institution accepts responsibility for any forgery or misrepresentation. The Medallion signature guarantee offers greater protection for the investor than something like a notary or copies of identification documents, as it is a form of insurance.

The Medallion signature guarantee helps protect investors when transferring their securities to a new owner, as it ensures that the signature is valid and that the issuer will honor the transfer of ownership. Additionally, Medallion signature guarantees may also be needed to process stock splits, dividend reinvestments, and the exercise of stock options. The Medallion signature guarantee stamps a document similar to a notarized document and is usually obtained through a bank, broker-dealer, or credit union.

The Medallion signature guarantee programs are sponsored by the Securities Transfer Agents Medallion Program, Inc. (STAMP), the New York Stock Exchange Incorporated (NYSE), and the US Stock and Exchange Commission (SEC). To participate in any of these programs, firms must meet strict criteria, including financial strength and creditworthiness, and must demonstrate to regulators that it complies with required customer protection regulations.

In order to obtain a Medallion signature guarantee, the customer must provide two forms of appropriate identification, including a current government-issued photo ID, such as a driver’s license or passport. The customer must also provide the document to be stamped and sometimes a release letter from the current holder. Once the documents are validated, the customer will receive a stamp with the name of the guarantor. If the customer’s documents are being transferred to a third party, they must provide that third party’s broker or financial institution with the Medallion signature guarantee, which will then be used to generate the correct transfer paperwork.

Having a Medallion signature guarantee on your transactions helps protect you by making sure the transfer is authentic. Obtaining a Medallion signature guarantee is an extra layer of protection to ensure that your securities are legally and safely transferred. By obtaining a Medallion signature guarantee, you can rest assured that the transfer of securities is being made by a legitimate likely and valid signature, increasing the security of the transfer process and providing you with peace of mind.