You have some stock to transfer.
The transfer agent sends you a form. You fill it out. Then you reach a line that says your signature must be accompanied by a Medallion Signature Guarantee.
Fine. You know what a notary is. Surely this is the financial-services version of the same thing.
It is not.
You bring the document to a notary. The notary tells you they cannot help. You call your bank. The person who answers has never heard of a medallion guarantee. Another branch says it offers them, but only for existing customers. A third says its authorized employee is available on Tuesdays.
Welcome to one of the more obscure pieces of plumbing still attached to the American securities system.
A medallion signature guarantee is a specialized guarantee used when ownership of securities is being transferred. It does more than witness your signature. The financial institution providing the guarantee is effectively standing behind that signature and accepting financial responsibility if it turns out to be fraudulent.
That explains both why a regular notarization will not work and why getting the stamp can be surprisingly inconvenient.
What Is a Medallion Signature Guarantee?
A medallion signature guarantee is a guarantee by an eligible financial institution that a signature authorizing a securities transfer is genuine and that the signer is an appropriate person to make the transfer.
It is commonly used with stocks, bonds, mutual funds and other securities when ownership or registration is changing.
The rules surrounding signature guarantees are part of the securities-transfer system governed by SEC Rule 17Ad-15.
Eligible guarantor institutions can include:
- banks;
- broker-dealers;
- credit unions;
- savings associations;
- trust companies and certain other financial institutions.
Being a bank does not automatically mean a particular branch can stamp your document. The institution generally has to participate in an accepted signature-guarantee program, and the employee applying the guarantee has to be authorized to do so.
Why Would You Need One?
The common thread is usually a change involving ownership or control of securities.
You may encounter a medallion signature guarantee when:
- transferring shares from one person to another;
- gifting stock;
- moving directly registered shares from a transfer agent to a brokerage;
- transferring certificated stock;
- re-registering securities after the owner’s death;
- moving securities into or out of a trust;
- changing the registered owner of an account;
- sending redemption proceeds somewhere other than the address or bank account already on file;
- or completing certain unusually large transactions.
The exact requirement comes from the transfer agent, fund company, brokerage or other institution handling your transaction.
You do not ordinarily need a medallion guarantee to buy or sell stock normally inside your brokerage account. Your brokerage already has an established relationship with you and its own procedures for authenticating instructions.
The medallion tends to emerge when securities have to cross the less-visible boundary between registered ownership, transfer agents, estates, trusts and financial institutions.
Medallion Signature Guarantee vs. Notary: What Is the Difference?
This is the source of most of the confusion.
Both involve someone checking your identity and watching or verifying a signature. Beyond that, they serve different purposes.
| Medallion Signature Guarantee | Notarization | |
|---|---|---|
| Main purpose | Authenticate a signature for a securities transfer | Verify identity/signature for legal documents generally |
| Who provides it | Eligible participating financial institution | Commissioned notary public |
| Financial guarantee | Yes—the guarantor assumes liability associated with an improper guarantee | No comparable securities-transfer guarantee |
| Used for securities transfers | Yes | Usually not sufficient |
| Can one substitute for the other? | No | No |
The U.S. State Department is unusually blunt on the subject: a medallion signature guarantee is not a notarial service.
The reason becomes clearer when you look at the risk involved.
A notary is primarily authenticating the act of signing. A medallion guarantor is telling the institution receiving the securities-transfer instruction that it can rely on the signature and the authority of the person signing it.
If the guarantee was improperly given and the transfer turns out to have been unauthorized, the guarantor can face financial liability.
Suddenly the reluctance of your neighborhood bank branch to stamp a $700,000 stock transfer for someone who wandered in five minutes ago seems less mysterious.
Where Can You Get a Medallion Signature Guarantee?
Your best first call is usually to a financial institution where you already have a relationship.
Try, in roughly this order:
- Your brokerage firm
- Your bank
- Your credit union
- Another financial institution with which you have an established account
Do not simply ask whether the bank has a notary.
Ask specifically:
“Does this branch provide Medallion Signature Guarantees for securities transfers?”
Then ask:
- Do I need to be an existing customer?
- How long must I have had an account?
- Do I need an appointment?
- Which branch provides the service?
- What documents should I bring?
- What is the maximum transaction value you can guarantee?
- Do all owners or signers have to appear?
- Is there a fee?
That phone call can save a great deal of recreational branch banking.
Why Won’t Every Bank Give Me One?
Because the bank is taking on risk.
The institution is not renting you a fancy stamp for five minutes. It is putting its name and financial backing behind the transaction.
That gives it a strong incentive to know:
- who you are;
- whether you actually own the securities;
- whether you have legal authority to transfer them;
- what the transaction is worth;
- and whether the supporting documents make sense.
Many institutions therefore restrict medallion guarantees to existing customers.
Some branches do not provide them at all. Others have only one or two employees authorized to use the stamp. Some institutions will guarantee only transactions below a particular value.
This is frustrating when all you want is a stamp on a piece of paper, but from the bank’s perspective the stamp is the least important part of the transaction.
What Should You Bring?
Requirements vary, so ask the institution before showing up. In general, expect to need some combination of:
- current government-issued identification;
- the document requiring the guarantee;
- a recent brokerage or transfer-agent statement showing the securities;
- the stock certificate, if physical certificates are involved;
- evidence of the value of the securities being transferred;
- and documents proving your legal authority if you are signing in another capacity.
That last category can become important very quickly.
If you are signing as an executor, trustee, attorney-in-fact, corporate officer or other representative, you may need documents such as:
- a death certificate;
- letters testamentary or other estate documentation;
- a trust agreement or certification of trust;
- a power of attorney;
- corporate resolutions;
- or other evidence showing why you are legally entitled to sign.
If there are multiple registered owners, the institution may require all of them to appear.
Do Not Sign the Form Before You Get There
This is worth saying explicitly.
If the bank or brokerage wants to witness you signing the document, arriving with the signature already completed can turn your productive trip into an opportunity to acquire a fresh blank form.
Ask the guarantor what it wants before signing.
And if the transfer agent sent specific instructions, bring those too. The person issuing the guarantee needs to know exactly what transaction the receiving institution expects.
The Guarantee Has to Be Large Enough for the Transaction
Medallion guarantees are issued with financial coverage limits.
The institution has to provide a guarantee with sufficient coverage for the value of the securities involved.
This is another reason to tell the bank the approximate transaction value when you make the appointment.
A branch may be perfectly capable of guaranteeing a $25,000 transfer and unable or unwilling to guarantee a multimillion-dollar one.
If the guarantee does not cover the value of the transaction, the transfer agent can reject it.
How Much Does a Medallion Signature Guarantee Cost?
There is no universal fee.
Some banks and brokerages provide the service without a separate charge to established customers. Others charge a fee. Some do not offer the service regardless of what you are willing to pay.
I would therefore avoid beginning the search with:
“Who sells medallion stamps near me?”
Begin with the institution that already knows you and holds your financial assets.
The customer relationship may be more important than the nominal fee.
What If My Bank Says No?
First determine what kind of “no” you received.
There is a meaningful difference between:
- “This branch does not provide medallion guarantees”;
- “Our bank does not provide them”;
- “We provide them only to customers”;
- “We cannot guarantee a transaction of this size”;
- and “We cannot guarantee this transaction based on the documentation you supplied.”
If the problem is the branch, another branch of the same institution may work.
If the bank cannot do it, try your brokerage or credit union.
If the transaction involves securities held at a transfer agent, call the transfer agent and ask what alternatives it accepts. It may be able to tell you which guarantee programs are acceptable and whether another procedure is available for your particular situation.
Do this before paying an unfamiliar third-party service to solve the problem.
What If You Are Outside the United States?
This can be significantly harder.
A U.S. embassy or consulate cannot simply solve the problem by applying a medallion stamp. State Department guidance specifically says consular officers are not authorized to provide medallion signature guarantees.
If you are abroad, contact the transfer agent or financial institution that requested the guarantee before doing anything else.
Ask exactly what foreign guarantee, participating institution or alternative documentation it will accept.
Do not assume an ordinary local notarization will be enough simply because obtaining it is easier.
Why Do Transfer Agents Still Care About This?
Imagine you own $500,000 worth of stock registered directly in your name.
Someone submits documents instructing the transfer agent to move those shares into a different name.
If transfer agents accepted any plausible-looking signature accompanied by a $10 notary stamp, securities fraud would become considerably more adventurous.
The signature-guarantee system creates a chain of responsibility.
The transfer agent relies on a participating financial institution. The financial institution verifies the signer and stands behind its guarantee. The medallion program provides standardized procedures and financial protection.
It is an old-fashioned-looking solution to a problem that remains extremely current: making sure the person transferring an asset actually has the right to transfer it.
What Are STAMP, SEMP and MSP?
If you start researching medallion guarantees, you may encounter several acronyms.
Transfer agents commonly recognize institutions participating in established medallion programs, including:
- STAMP — Securities Transfer Agents Medallion Program;
- SEMP — Stock Exchanges Medallion Program;
- MSP — New York Stock Exchange Medallion Signature Program.
You generally do not need to become an expert in this alphabet soup.
Your job is to ask the institution requesting the guarantee what it accepts, then obtain the guarantee from an eligible institution participating in an acceptable program.
Can a Transfer Agent Reject a Medallion Guarantee?
Yes.
A medallion stamp is not a magic command that forces a transfer agent to complete whatever transaction is written above it.
The transfer agent can still reject the transaction because:
- the guarantee is unacceptable;
- the guarantor is not authorized;
- the coverage is insufficient;
- the paperwork is incomplete;
- the account registration does not match;
- legal authority has not been established;
- or another requirement of the transfer has not been satisfied.
This is why the smartest first step is often to call the receiving transfer agent and confirm exactly what it wants.
A Practical Checklist
If you have just been told to obtain a medallion signature guarantee, this is the order I would use:
- Read the transfer instructions carefully.
- Call the transfer agent if anything about the requirement is unclear.
- Determine the approximate value of the securities being transferred.
- Call your brokerage, bank or credit union.
- Ask specifically for a Medallion Signature Guarantee, not a notary.
- Confirm that the branch can guarantee a transaction of your size.
- Ask exactly which documents and identification are required.
- Do not sign prematurely if the guarantor needs to witness the signature.
- Bring documents proving ownership and any authority to act for an estate, trust or another person.
- Before leaving, make sure the guarantee was placed exactly where the transfer instructions require it.
The Stamp Is the Visible Part. The Guarantee Is the Important Part.
A medallion signature guarantee feels absurdly formal when you first encounter one.
There is a green stamp. There are special programs. Only certain financial institutions can provide it. Your perfectly respectable notary is suddenly useless. The bank employee who can stamp the form may apparently inhabit only one branch in the county.
But the machinery makes more sense once you understand what is actually happening.
The transfer agent is being asked to change ownership of a financial asset. Rather than relying solely on a signature, it wants another regulated financial institution to authenticate the person making the request and put its own financial backing behind that authentication.
So when someone tells you that you need a medallion signature guarantee, the useful question is not:
“Where can I get this stamped?”
It is:
“Which financial institution that already knows me is willing and authorized to guarantee this securities transfer?”
That question usually gets you to the right desk much faster.