What Is a Medallion Signature Guarantee?

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What Is a Medallion Signature Guarantee?

Let me explain what a medallion signature guarantee is—it's a crucial security feature you need when you're transferring ownership of securities. If you're selling or moving stocks or bonds that you hold in physical form, this certification stamp confirms that your signature on the transaction is genuine. But if you're handling your securities through a broker, you can skip this step entirely.

Key Takeaways

You need a medallion signature guarantee for the legitimate transfer of physical securities, and it's only available from financial institutions that are part of specific medallion guarantee programs. This is especially important when you're selling or transferring stocks and bonds in physical form, but not if they're managed digitally through a broker. Most financial institutions will only provide this to established customers, sometimes for free, though fees might kick in for high-value assets. Getting one can be tough because of the risks involved for banks, so they usually reserve it for well-known clients. Big U.S. banks like Bank of America, Chase, and Capital One do offer it, but not every branch can handle it on the spot—you might need to send documents for review.

Understanding the Medallion Signature Guarantee Process

To issue a medallion signature guarantee, the institution has to be a member of one of three programs: the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP), or the New York Stock Exchange Medallion Signature Program (MSP). You can usually get this at a bank or credit union where you're already a customer. They might charge a small fee, ranging from nothing if you have a strong relationship to up to $100 for assets worth $200,000. If the institution has stamps on-site, you could get it the same day as long as everything checks out; otherwise, expect a wait of two to five business days for review. Remember, the guaranteeing institution backs this with their own assets, which is why it's not handed out easily.

Banks and Institutions Offering Medallion Signature Guarantees

Chase
Citi
Capital One
Merrill Lynch (Bank of America)
Navy Federal Credit Union
Northeast Credit Union

Top Situations Requiring a Medallion Signature Guarantee

You'll often need a medallion signature guarantee in scenarios like gifting securities, moving them from one account to another, or dealing with them after the owner passes away. These are the most common uses, ensuring everything is above board.

This guarantee ties closely to share certificates, which are physical documents proving your ownership of a company's shares. Owning a bond is different—it's essentially a loan to a company or government. A share certificate includes details like the certificate number, company name and registration, your name and address as the shareholder, the number of shares, class of shares, issue date, and the amount paid for them. Companies might issue shares in various classes, such as Berkshire Hathaway's Class A (BRK.A) and Class B (BRK.B), or those from Ford (F), Meta (META), and Alphabet (GOOG, GOOGL), each offering different rights on dividends and voting. As a certificate owner, you could assign a proxy to vote on company matters. If your certificate gets damaged, lost, or stolen, the company can replace it if you return what's left of the original. Certificates come in registered or bearer forms, with bearer ones allowing the holder full rights. These days, most investors prefer electronic records over physical certificates.

Which Banks Offer Medallion Signature Guarantee?

Plenty of U.S. banks provide medallion signature guarantees, but it's not available at every branch. Major players like Bank of America, Chase, and Capital One are in on it—if a branch lacks an on-site reviewer, you'll have to send your documents elsewhere for processing.

How Long Is a Medallion Stamp Good For?

The medallion stamp remains valid only for the date it's signed—don't count on it holding up beyond that.

How Much Does It Cost to Get a Medallion Signature?

You get these from authorized institutions, and if you're a longstanding customer at a big bank, it might be free. But if fees apply, expect to pay anywhere from $50 to $100 or more, depending on the asset value.

Why Is a Medallion Signature Guarantee So Hard to Get?

These guarantees put financial institutions at risk for liabilities, so they don't issue them to just anyone. They're typically reserved for established customers, often with only a small fee.

The Bottom Line

In essence, the medallion signature guarantee confirms the identity and signature when you're transferring securities or investments. Institutions like banks and credit unions must be part of one of the three medallion programs to offer it. Due to the financial risks, they're cautious about issuing them. You'll most likely need one for gifting securities, transferring upon death, or moving assets between accounts.