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Best Bank Account Interest Rates - Summary for September 20, 2016Little Known Service at Your Local Bank: Medallion Stamp
Having an account at a local brick-and-mortar bank or credit union can sometimes be very useful. A reader described his experience in the forum with his local banks when he was in need of a Medallion stamp guarantee (also called a Medallion signature guarantee). As you can read in his post, it can be difficult to get a bank to provide this.
Wikipedia has a good summary of a Medallion signature guarantee:
In the United States, a medallion signature guarantee is a special signature guarantee for the transfer of securities. It is a guarantee by the transferring financial institution that the signature is genuine and the financial institution accepts liability for any forgery. Signature guarantees protect shareholders by preventing unauthorized transfers and possible investor losses. They also limit the liability of the transfer agent who accepts the certificates.
How is this different than a notary public? This BankersOnline.com article summarizes the difference:
The Medallion Signature Guarantee should not ever be confused with a notary public. The big difference is in the liability. The organization that guarantees the authenticity of the signature is liable for the financial value of the transaction.
More details about the differences are listed in this BankersOnline.com article Medallion Stamp vs. Notary Public.
One type of security that can require a Medallion signature guarantee is a Treasury Bill. The reader who wrote about his experience inherited T-bills, and he needed a Medallion stamp for the Treasury form 1455 that is used to request a distribution of T-bills.
Another type of security that can require a Medallion signature guarantee is an annuity. My dad had a small annuity at Nationwide Financial. When he passed away, I noticed that the annuity claim form required a Medallion stamp if the withdrawal request is greater than $50,000. Since the annuity amount was under this, I didn't have to go through the hassles that the reader described.
Where do you go if you need a Medallion stamp? A local bank or credit union is the first place to look. The institution has to be a participant in the Medallion stamp program. There's a enrollment cost, so many institutions may not be participants. Program participants also have to worry about liability. As described in this BankersOnline.com article, "If the signature turns out to be a forgery your institution will be expected to pay the loss."
Due to the cost and liability concerns, banks will probably only provide the Medallion stamps if you are a customer. This is what the reader described. His local branches of Citibank, Wells Fargo, HSBC and Bank of America only offered this service to customers. Wells Fargo not only required an account, but also required that the account be at least six months old. HSBC required that the customer have a brick-and-mortar account. The HSBC branch refused to provide any service to those with online HSBC accounts. Bucking the recent trend, Bank of America had the best service. According to the reader, the Bank of America branch was willing to provide the stamp even though he only had a Bank of America credit card.
If you are looking for a local bank or credit union, you might want add the Medallion stamp program as another item for your checklist. There are many other features that will likely be above this. I described several of these in my post Finding the Best Free Checking Accounts at the Best Credit Unions. The Medallion stamp may be one reason to keep an account at a large bank. It would be interesting to know how many community banks and credit unions offer this program.
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.
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.
http://www.depositaccounts.com/blog/2010/10/choosing-a-new-bank-why-you-want-at-least-two-banks-or-credit-unions.html#41334
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)
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.
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.
If thats too much risk you need to shut your doors because every & any loan you make is more risky than that.
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.
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.
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.
I just came from 2 BANk OF AMERICAS in Boston and they won't do it unless my parents (from Florida) had an account with them. It doesn't matter that I have thousands of dollars with them and have had an account for 30 years.
Where can I go to get a medallion on these stock transfers?
Help!!
I also get paperwork notarized (as in Notary Public) by them.
I find Fidelity to be easier to work with than any bank or credit union for this type of thing.
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ROBERT R BOTTON
Surviving spouses can use Disclaimer of Interest forms to embezzle money from named child beneficiary's.