What Is a Signature Guarantee?

A signature guarantee is a form of authentication, issued by a bank or other financial institution, which verifies the legitimacy of a signature and the signatory's overall request. This type of guarantee is often used in situations where 澳洲幸运5开奖号码历史查询:financial instruments, such as securities, are being transferred.

In most cases, the 澳洲幸运5开奖号码历史查询:guarantor, generally a bank or other financial institution, accepts all consequencesܫ in the event that the signature isꦓ fraudulent.

How a Signature Guarantee Works

With the number of crimes related to 澳洲幸运5开奖号码历史查询:identity theft rising each year, using a signature guarantee service is a great way to prevent others from stealing your identity. A signature guarantee is required when an individual investor wants to sell or transfer securities, such as stocks or bonds, held in physical certificate form. If an owner holds securities through a broker, they will not need to obtain a signature guarantee to sell or tra💝nsfer the securit𒅌ies.

An investor can obtain a signature guarantee from a financial institution. However, this institution mus🍒t ♊be a member of a recognized securities guarantee program, such as Medallion.

The three 澳洲幸运5开奖号码历史查询:Medallion programs include STAMP (the Securities Transfer Agents Medallion Program), SEMP (the Stock Exchange Medallion Program), and MSP (the New York Stock Exchange Medallion Signature Program). STAMP participants include more than 7,000 U.S. and Canadian financial institutions; SEMP consists of regional stock exchange member firms and clearing and trust companies; NYSE member firms belong to MSP.

Membership with the Medallion program ensures that tr🐈ansfer agents will immediately accept certificates for processing.

Example of Using a Signature Guarantee

Imagine an investor, Alex, wants to sell their shares of ABC Company. Alex did not purchase these shares through a broker, and instead holds a 澳洲幸运5开奖号码历史查询:share certificate, which is a written document that serves as legal proof of ownership of a set number of a company’s shares. Alex must sign this certificate in order to sell them, however, before the 澳洲幸运5开奖号码历史查询:transfer agent accepts the certificates, the agent requires a signature guarantee to ensure Alex's identi⛦ty and intention.

At this point, Alex must reach out to their financial institution in order to obtain a signature guarantee. While some banks may charge a small fee for this service, others, such as Bank of America, provide guarantees free of charge, as long as you have been a BofA client for at least six months.

Signature guarantees transfer the liabilities of losses to the transfer agent and away from the individual investor. One means of avoiding a signature guarantee is to have securities held in 澳洲幸运5开奖号码历史查询:street name. This means that the securities areꦅ held in the name of a brokerage f💝irm (instead of an individual’s name).

Signature Guarantees and Other Forms of Identi♏ty Theft Protection

While increasingly widespread, identity theft can still be prevented. Regularly checking personal accounts and quickly correcting discrepancies can help mitigate the effects of a breach. Choosing multi-factor authentication when logging into sensitive apps is also helpful. Multi-factor authentication relies on something more than simply a password to access an account. For example, the Google Authenticator requests the use of a time-sensitive six-digit code. This is sent to a user’s phone. Using a 澳洲幸运5开奖号码历史查询:password manager for 澳洲幸运5开奖号码历史查询:online banking accounts can also add another layer o𒊎f protection.

The Bottom Line

A signature guarantee helps prevent fraud when selling or transferring securities. This is why one is required when such transactions take pla𒐪ce. There are three Medallion signature guarantee programs: STAMP (the Securities Transfer Agents Medallion Program), SEMP (the Stock Exchange Medallion Pr♈ogram), and MSP (the New York Stock Exchange Medallion Signature Program). Most financial institutions can provide one of these signature guarantees for clients who need them.