Medallion Signature Guarantee

A medallion signature guarantee is a securities-transfer guarantee provided by an eligible financial institution that participates in a recognized medallion program. The guarantee supports the authenticity of the signature and the signer’s authority and capacity, while making the guarantor financially responsible under the applicable warranty framework.

The guarantee is commonly shown as a coded stamp or imprint on a stock certificate, stock power, transfer form, or other securities document. It is not the same as a notary seal and is not a general certification that the transaction is legal, wise, or free of restrictions.

Key Takeaways

• A medallion guarantee is designed for securities transfers, not ordinary contracts or identity verification.
• It is issued by a participating eligible institution, not by any bank employee or notary.
• The guarantor stands behind specified facts about the signature, authority, and legal capacity of the signer.
• Transfer agents use the guarantee to manage forgery and unauthorized-transfer risk.
• A guarantee may be required for some certificate, DRS, estate, gift, redemption, or corporate-action instructions, but not every transaction.

What the Medallion Guarantee Covers

The guarantor generally confirms that it has a basis to stand behind:

• the genuineness of the signature
• the identity of the signer
• the signer’s authority to sign for the registered owner
• the signer’s legal capacity
• the transaction amount within the institution’s guarantee authority and procedures

The precise warranties depend on the guarantee and applicable law. A transfer agent still reviews the rest of the package, including the security, ownership record, restrictions, share amount, certificate, legal capacity documents, and delivery instructions.

What It Does Not Guarantee

A medallion stamp does not prove that:

• the security is authentic, valuable, liquid, or suitable
• the transfer satisfies every securities-law, tax, estate, sanctions, or contractual requirement
• the shares are unrestricted
• the transferee has paid fair value
• the transaction will be processed immediately
• the transfer agent must accept inconsistent or incomplete documents

The guarantee addresses a defined transfer-authentication risk. It is not investment approval or a substitute for legal review.

Medallion Guarantee vs. Notary

If a transfer agent requests a medallion guarantee, a notarized signature ordinarily will not satisfy that request unless the agent expressly permits another method.

When It May Be Needed

Common situations include:

• transferring or selling a physical stock certificate
• completing a stock or bond power
• gifting directly registered shares
• transferring securities from an estate or trust
• changing registration to a different owner or legal capacity
• submitting selected mutual-fund redemption or transfer instructions
• moving securities through a process that requires a guaranteed instruction

Electronic brokerage trades generally do not require the customer to obtain a medallion stamp for each sale. Account controls, clearing messages, and intermediary guarantees handle the workflow differently.

How to Request One

1. Obtain current written instructions from the transfer agent, fund, issuer, or broker.
2. Ask a bank, credit union, broker-dealer, or other eligible institution whether it participates in an accepted medallion program.
3. Confirm customer-relationship, document, transaction-value, appointment, and fee policies.
4. Bring the unsigned form, government identification, account statements, and evidence of ownership and signing authority.
5. For an estate, trust, entity, or agent, bring the current legal documents establishing capacity.
6. Sign only as the guarantor directs and inspect the completed document before submission.

Institutions can decline the request when they cannot verify the transaction or do not have authority under their program and internal policies to guarantee it.

Worked Example: Estate Transfer

An executor needs to re-register 600 directly held shares from a deceased owner’s account to the estate beneficiaries. The transfer agent requests an estate transfer form, certified death certificate, appointment evidence, tax documentation, and a medallion guarantee on the executor’s signature.

The executor brings the unexecuted form and estate records to a participating institution. After verifying the executor’s identity, capacity, ownership record, and transaction value, the institution places its medallion guarantee. The transfer agent then reviews the full package and records the transfer if every requirement is satisfied.

The stamp does not establish the beneficiaries’ tax basis or prove that the estate distribution is proper under every governing document. Those are separate legal and tax questions.

Common Problems

• The institution does not participate in a recognized program.
• The requester is not an established customer under the institution’s policy.
• The name or legal capacity differs from the transfer-agent record.
• The document was signed before the guarantor’s required review.
• Estate, trust, corporate, or power-of-attorney evidence is incomplete.
• The transaction exceeds the branch’s or institution’s guarantee authority.
• The stamp is damaged, altered, expired for the submission, or placed in the wrong location.

Contact both the guarantor and receiving transfer agent before correcting or replacing a rejected document. Altering a guaranteed form can invalidate it.

Public Source Checks

• Investor.gov: Transferring Assets explains signature guarantees, participating institutions, and the three medallion programs.
• SEC: Acceptance of Signature Guarantees explains the Rule 17Ad-15 framework and written transfer-agent acceptance standards.
• SEC: Transfer Agents provides the regulatory context for transfer-agent processing and safeguarding.

Related Terms

• Signature Guarantee: The broader securities-transfer warranty concept.
• Medallion Stamp Program: The recognized program structure under which participating institutions issue medallion guarantees.
• Stock Power: A separate document authorizing a securities transfer.
• Stock Transfer Agent: The issuer’s recordkeeper and reviewer of transfer instructions.
• Direct Registration System (DRS): Direct electronic registration on issuer records.

FAQs

This article is educational only and does not provide legal, tax, estate, compliance, or investment advice. Confirm the exact document and guarantee requirements with the receiving transfer agent or financial institution.