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Signature Guarantees to Transfer Securities

Signature Guarantees to Transfer Securities

| Mar 15, 2018 | Uncategorized |

Sometimes, in the administration of an estate, we need to liquidate stocks or bonds.  Often, the transfer agent requires a signature guarantee.

Signature guarantees come in basically three different forms.  The first is a notary.


A notary public is a public person (not necessarily employed by a bank or brokerage house) authorized by the state as a person who can guarantee a signature.  The notary pays a fee and purchases a device that puts a stamp on a piece of paper. A notary stamp is uniformly accepted by government offices, including courts of law.  It is all that is required on deeds. When a notary signs a document, he/she acknowledges that the signer has personally appeared before the notary, that the person was positively identified, and that the signature is of the person who appeared in front of the notary.  My experience is that transfer agents for stocks or bonds totally ignore a signature guarantee done by a notary public.

Signature Guarantee

Another form of signature guarantee is called simply “signature guarantee.  These are often required to liquidate or transfer securities, e.g. bonds, mutual funds, or stocks.  These are done by some banks, savings and loan associations, trust companies, credit unions, and brokerage houses.  For example, Wells Fargo, US Bank, Charles Schwab, Edward Jones, Fidelity, and Vanguard all would be able to do a signature grantee.  However, many of these will not guarantee a signature unless the signer is a customer of the bank or brokerage. So, that presents a problem.

Medallion Signature Guarantee (MSG)

The third form of signature guarantee is a medallion signature guarantee.  This is the same type of guarantee as a regular signature guarantee only the number of institutions that give this is more restricted.  A medallion signature guarantee is considered the gold standard of signature guarantees. The institution giving the signature guarantee gives a binding warranty that a) the signature is genuine, b) the signer was an appropriate person to endorse the document, and c) the signer had legal capacity to sign.  The financial institution accepts liability for any forgery. Not all MSG stamps are of equal value. A special coded prefix determines how much monetary value can be guaranteed. For example, a stamp with a “D” prefix is only good up to $250,000 whereas a stamp with a “C” prefix is good up to $500,000. Lawyers cannot give either a regular signature guarantee or a medallion signature guarantee.  Again, an institution that can do a signature guarantee probably will require that a person have an account at that institution before it will give a medallion signature guarantee.

In my experience, signature guarantees became much harder to come by after 9/11.  After that event, congress passed the USA Patriot Act (officially known as the “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001”) which contains a section on money laundering.

For an example of institutions that will give a medallion signature guarantee, the attached list is a listing of such institution in the 55044 zip code.

Practice Tip

When transferring securities, find out what the transfer agent requires for a signature guarantee.  If a medallion signature guarantee is required, find out where you can get one. If there are three beneficiaries, and only one can get a medallion signature guarantee, have that person obtain the funds and have him/her distribute the funds according to the beneficiary designation or Will.