Little Known Service at Your Local Bank: Medallion Stamp

Anonymous - #1, Wednesday, December 21, 2011 - 10:21 AM

Signature guarantees have historically been required by securities firms to transfer securities from one person to another, and by mutual funds to redeem shares.  In many cases, they are only requested where the transaction exceeds a certain amount, such as $250K.  In the banking area, I've needed them to transfer IRA funds from a mutual fund to a bank.  It's the fund that has required the guarantee on the transfer documents, even though I'm a "customer" of both institutions.

nothlit - #2, Wednesday, December 21, 2011 - 10:32 AM

I remember a few years ago I had to get a medallion signature guarantee to link my credit union account to TreasuryDirect. They seem to have gone to the complete extreme recently, however, as a couple of months ago when I linked a different account there was no verification whatsoever (not even the usual trial deposit method).

nothlit - #3, Wednesday, December 21, 2011 - 10:33 AM

*the complete opposite extreme, I meant to say.

me1004 - #4, Wednesday, December 21, 2011 - 11:03 AM

Medallion signature guarantee is the premier one, will be accepted across the board. But many or most banks will also offer their own signature guarantee or another brand, and some places will accept that instead of the Medallion signature guarantee. Ask. Not all banks will offer Medallion, but they very likely will offer their own instead, and that might be acceptable in any particular circumstance. Medallion is basically just a brand. 

I also note, while I haven't used one in some years, at least some of them limit their liability, typically to $25,000. Maybe that is not what Medallion does, don't remember -- I have used both Medallion and bank signature guarantees. The liability mentioned here is, at least in effect, an insurance policy, unlike a notary. As somewhat of an insurance policy (I'm saying "somewhat" and "in effect" because I don't know that it actually is classified as that) the liability would be paid out readily. I believe a notary also would be liable, but you would have to file a lawsuit and spend years in litigation -- and securities firms don't feel like doing that. 

If your bank doesn't offer Medallion, it most likely will offer another signature guarantee. Ask the securities place whether it will take other than Medallion. I note, normally banks offer signature guarantee free, but I have found at least one of that offered both Medallion and its own, and it charged for Medallion -- so I used the free one, because my mutual fund said that one was acceptable. 

I also warn: don't let the bank decide whether you need notary or signature guarantee. Like too many other things, the people at the banks have no idea what they are talking about. Don't even let them decide whether you need Medallion or their own brand -- ask the place you will be presenting it to. 

SteveIAm (anonymous) - #5, Wednesday, December 21, 2011 - 12:46 PM

I had an issue with a bank where I have been a customer for about 10 years that refused to give me a medallion stamp.  I had inherited a TIAA annuity and TIAA wanted a medallion stamp on the transfer forms.  The bank employee said that their bank only gave medallion stamps on stock transfers and not annuities (or mutual fund transfers, etc), and gave me an 8.5X11 inch piece of paper with a lot of 8 point font on it explaining that banks position.  They claimed that the medallion stamp was only intended for stock transfers, and suggested I ask TIAA if a notary seal was enough. Fortunately, I had not closed some accounts I had inherited at a second bank and they were happy to give me the medallion stamp on the TIAA paperwork.

Anonymous - #6, Wednesday, December 21, 2011 - 3:18 PM

About 3 years ago was the first time I needed a medallion signature guarantee.  While looking for an institution that would give it, I was told by one bank manager that there are different "colors" or levels of medallion guarantees with different dollar limits:  $50,000, $100,000, $250,000, $500,000, $1,000,000.  A bank branch might offer only the lowest level; the main bank might offer a higher level; and maybe neither one offers the highest level.  Presumably the institution must pay a higher fee for a higher level of guarantee; so maybe the customer will be charged more for a higher level of guarantee.

me1004 - #7, Wednesday, December 21, 2011 - 4:07 PM

StevedIAm: exactly! As I said, "Like too many other things, the people at the banks have no idea what they are talking about. Don't even let them decide whether you need Medallion or their own brand ..." Or whether it is only for stock transfers. (I often have to use it just to give any new instructions to a mutual fund.)

Anonymous #6: thanks for filling that out. That's what I was referring to. The $25,000 level I mentioned might have been a bank brand rather than the Medallion brand. But I thought Medallion also had limits. 

Ken, your story is saying the bank giving the stamp would be liable for any transaction based on it. I think that not quite true. They would be liable to the amount specified, as per anonymous #6. You might want to clarify that in the story. 

Anonymous - #8, Wednesday, December 21, 2011 - 9:23 PM

deju vu:

http://www.depositaccounts.com/blog/2010/10/choosing-a-new-bank-why-you-want-at-least-two-banks-or-credit-unions.html#41334

Anonymous - #11, Thursday, December 22, 2011 - 4:06 AM

Personally, I dont blame the banks.  The stamp is meant for individual money transfers.  A lot of places like treasurydirect are using it for ID checks.  Thats the job of a notary.  But because notarys can be easily forged, they want something more secure, and banks are not willing to stick their neck out.

RJM - #12, Thursday, December 22, 2011 - 7:14 AM

I needed one a few months ago. The branch manager at my little small town wells fargo balked.

Refused to do it.

He ended up notarizing it and the other party accepted it but he couldnt grasp that ALL he was guaranteeing was my signature. It was a document saying I sold some stock months prior and he was talking about checking the market price on the date of sale. (Which is totally irrelevant but I didnt bother arguing with him)

tightwad - #13, Thursday, December 22, 2011 - 2:54 PM

Good article and info posters! I learned something today. Nice to see intelligent info shared.

Anonymous - #14, Thursday, December 22, 2011 - 4:04 PM

RJM- I've gotten the Medallion Signature Guarantee from several different banks and credit unions.  Some do check the value of what they are stamping.  One of the bankers told me he had to check because their stamp was only good for $25,000 (as #6 stated, there are various limits) so he could only stamp documents for transacations under $25K

rjm (anonymous) - #15, Saturday, December 24, 2011 - 8:29 AM

All the $25 limit means is that IF i ended up somehow faking who I was, the banks max liability would be $25k.

 

Doesnt matter if its a $500k transaction, he is still ONLY guaranteeing my signature. Nothing else.

 

Its supposed to be like a notary only better. But, in backwoods alabama, I doubt the guy sees them more than a few times a year if that.

 

Thanks for your comments though.

Chyvan (anonymous) - #16, Sunday, December 25, 2011 - 1:20 PM

I would encourage anyone doing business with an entity  that requires Medallion Guarantees to quit doing business there and tell them why.  The program is being seriously abused by many mutual fund companies.  I was doing business with Chase's One Group Funds.  They wanted a Medallion Guarantee on an automatic $250/mo invest form.  The amount of work on my part to protect them from a miniscule loss caused me to rethink that relationship.

Anonymous #1 (anonymous) - #17, Thursday, February 9, 2012 - 3:54 PM

Very interesting info, but I can tell you as an executor to an estate that has over $500,000 in stock, it is a major pain the butt.  Some institutions will go as high as $100,000.  The limit that they choose is based on what amount they have on their Surety Bond.  Unless the institutions are very lax especially if they are dealing with a known customer I would imigine the risk factor is very low.  However the stock transfer companies ALL require the stamp when transferring stock.  I just started looking and I am finding out that it is difficult to find someone to provide the service.

Anonymous - #19, Tuesday, September 25, 2012 - 5:23 PM

The medallion stamp is for the transfer of securities. It not only verifies the signer is who they say they are, but also verifies that person is entitled to actually make the tranfer.

Anonymous - #20, Wednesday, October 17, 2012 - 8:08 AM

#19 - that is likely not correct, the bank employee stamping your transfer form has no idea if you're "entitled" to make the transfer or not. All he's doing is verifying that you are who you say you are, and by stamping it is providing the bank's guarantee up to $X amount.

I have used this service at several banks and credit unions. Some ask for the value, some don't. One actually required me to prove the value by bringing in a current account statement, before they would do it. So, it's definitely a YMMV situation.

Banker Joe (anonymous) - #21, Thursday, February 7, 2013 - 12:07 PM

Interesting discussion.  Our community bank does not have a brokerage company but we do have people, some customer and some non-customers, ask us about getting documents stamped with Medallion Signature Guarentee.  They have normally been told by their brokerage customer to come to their local bank.  100% of the transactions do not involve our bank what so ever.  The brokerage firms attempt to "indemnfiy" themselves from this transaction and are asking us, a uninvolved third party to take this risk.  I have no idea what any financial institution would accept this risk.  It seems like it should be the brokerage firms (that is telling their customer that they need this) responsibility to find a local resource for their customer to obtain this service.  Rather than some of the comments that the bank does not know what they are talking about, a bigger question might be why banks would take on a significant risk for the benefit of an unrelated Brokerage Firm.

rjm (anonymous) - #22, Thursday, February 7, 2013 - 8:06 PM

banker joe. You are not taking "significant risk". You verify the person signing is who they say they are just like a notary.

 

If thats too much risk you need to shut your doors because every & any loan you make is more risky than that.

rjm (anonymous) - #23, Thursday, February 7, 2013 - 8:07 PM

And the benefit is for your customer, not the brokerage firm.

 

Anonymous - #24, Friday, February 15, 2013 - 10:16 PM

rjm, I think you understate the problem. You have this part right: "You verify the person signing is who they say they are...", but the liability is different than that of a notary.

If the bank messes up, and the assets are transfered to a party that is not who they say they are, then the bank offering the signature guarantee is on the hook for the entire amount.

Example: Some con-man goes in to a bank with forged IDs and gets a signature guarantee on a form that authorizes transfer of, say, $500,000 from someone else's account to an account he controls. He sifted through trash, or hacked into some database to get account numbers and other identifying information. He isn't who he says he is, but he has all the right documentation and the bank is duped. The transfer is made, he immediately empties that account, and he disappears. The bank providing the guarantee pays $500,000 to restore the lost funds to the legitimate owner.  They are insured for this, of course, but identity theft is becoming pretty sophisticated, and I suspect that they do run some risk of being on the hook if they veer even slightly from established procedure. And when it comes right down to it, how does one truly know someone is who they say they are short of fingerprinting, or DNA, or iris-scanning? Document forgery is quite sophisticated. I can see why a bank might be leery.

On the other hand, it's a necessary service so there should be a better way. We shouldn't be required to run around begging banks to do this until we find one that will, nor should we be required to open useless accounts, so we can be "customers", just to get this done. Perhaps every bank should be required to do this as a cost of doing business - for customers and non-customers - with some safety net in place to protect them so they aren't so reluctant to do it. If I can conduct million dollar transactions online with institutions that have never laid eyes on me, this shouldn't be so difficult. It just seems like a very archaic way of dealing with personal identification. I don't have a solution because I'm not in this line of work, but surely there are smart people in this field who can come up with a better way.

RJM - #25, Saturday, February 16, 2013 - 11:15 AM

I just the other day needed a signature guarantee again.

Fidelity wouldnt link my brokerage account with my new credit union account. It kept rejecting it presumably because its not a checking account.

So they sent this form asking for a signature guarantee. Went to the credit union and the manager was a bit evasive and finally ended up saying his stamp only guarantees up to $100,000 transactions and that if I tried one larger it wouldnt go through. Something about the coding.

 

I had no problem linking my Ally savings & ING savings with my brokerage account. But apparently their way wouldnt work so I had to send in paper forms.

 

Im still waiting for fidelity to confirm it.

Anonymous - #26, Thursday, March 21, 2013 - 8:57 PM

When my wife and I got married, she changed her last name by hyphenating mine on to the end. She is now trying to change her name on her her IRA, but they require a Medallion Signature Guarantee. Our credit union doen't offer the stamp. She isn't transferring or withdrawing the money. We are able to add funds monthly using a check with her new hyphenated last name, but they won't update the last name on the account without the stamp. Its very frustrating and we are probably going to "roll" the funds into a different company because of this. Ironically, the company requiring the stamp can offer no help on where to obtain the stamp that they require. Any suggestions?

Anonymous - #27, Tuesday, March 26, 2013 - 5:46 PM

I, too, am having a similar problem. My mother died last year and I am the executor of her estate. Several years ago, her insurance company demutualized and she was given a nominal number of shares worth less than $3,000. I was told that I had to get a gold medallion signature to have the shares transferred from her name to her estate. I went to the bank where she did (and I do) business and met with the bank's financial officer. I was basically told that if I were to set up a brokerage account, they could do it but otherwise they couldn't. I in no way want a brokerage account with this bank. I don't see why, since the bank is holding her money, which would certainly cover what the stock is worth, the bank refuses to provide this service.

Anonymous - #28, Wednesday, April 24, 2013 - 3:29 PM

Kemark is the organization that issues the Medallion stamps. Here is what its website says:

http://www.kemarkfinancial.com/stamp.html

:: STAMP & SEMP PROGRAMS ::



The Securities Transfer Agents Medallion Program (STAMP) and the Stock Exchanges Medallion Program (SEMP) are signature guarantee programs endorsed by the Securities Transfer Association (STA) and recognized by securities industry participants in the United States and Canada. The combined membership of these Programs exceeds 7000 Guarantors.

For over one hundred years, Issuers of Securities and Transfer Agents have relied upon the signature guarantee process for the transfer of securities. This process, codified in the Uniform Commercial Code (UCC), makes the Transfer Agent liable for improper securities registration. To register or re-register a security, the Transfer Agent or Issuer relies upon the warranties made by a Medallion Guarantor when placing a Medallion Guarantee Stamp on a security, namely, that the signature is genuine, the signer is an appropriate person to endorse, and the signer had the legal capacity to sign.

SEC Rule 17ad-15 requires that Transfer Agents adopt an equitable methodology for acceptance of signature guarantees from eligible Guarantor institutions. To comply with the SEC Rule, Transfer Agents approved three Medallion Signature Guarantee Programs, STAMP, SEMP, and MSP (Medallion Signature Program).

For investors living abroad, if a Medallion cannot be secured from a branch of a US or Canadian Medallion Program member, the investor would contact the Issuer or Transfer Agent for information on alternative processing.