What Is the Securities Transfer Agents Medallion Program?

Transferring securities, such as stocks or bonds, requires verification to prevent fraud and ensure legitimacy. A key safeguard in this process is the Securities Transfer Agents Medallion Program (STAMP), which provides a signature guarantee essential for many financial transactions. Without it, individuals may struggle to complete ownership transfers.

Role in Transfer Processes

When securities change ownership, financial institutions require proof that the transfer request is legitimate. STAMP verifies the identity of the person initiating the transaction and confirms their authority, preventing unauthorized transfers that could lead to financial losses or legal disputes. Without this verification, brokers and transfer agents may refuse to process the request, delaying access to assets.

The program is particularly relevant for physical stock certificates, which, though less common due to electronic record-keeping, are still used in some cases. Investors selling or re-registering shares held in certificate form must provide a signature guarantee to prove ownership. This requirement also applies to transfers due to inheritance, gifting, or corporate mergers.

Even when securities are held in brokerage accounts rather than as physical certificates, a Medallion signature guarantee may still be required. For example, if an investor transfers assets between brokerage firms, the receiving institution may request this verification, particularly for large transactions where fraud risk is higher.

Authorized Institutions

Only financial institutions that meet strict eligibility criteria can participate in STAMP. Banks, credit unions, and brokerage firms must demonstrate financial stability, maintain adequate insurance, and comply with industry regulations before being approved. This ensures that only reputable institutions issue Medallion signature guarantees, reducing fraud risk.

Approved institutions receive specialized equipment to imprint the Medallion stamp, which contains security features preventing unauthorized duplication. The stamp includes unique identifiers linked to the issuing institution, allowing transfer agents to verify authenticity. If an institution improperly issues a guarantee—whether due to negligence or fraud—it assumes liability for any resulting financial losses.

Not all financial institutions participate in STAMP, even if they handle securities transactions. Some banks and brokerage firms limit this service to existing clients due to liability concerns. Investors may need to contact multiple institutions before finding one that offers the service. Some firms also impose transaction limits, meaning they will only provide guarantees for transfers below a certain dollar amount. If a transfer exceeds this threshold, the individual may need to seek approval from a higher-tier institution.

Required Documentation

Obtaining a Medallion signature guarantee requires individuals to present documents verifying their identity, ownership rights, and the legitimacy of the transaction. While requirements vary by institution, most request government-issued identification, such as a passport or driver’s license. Additional verification, such as a Social Security card or proof of address, may be necessary in some cases.

Proof of ownership is also required. This could include account statements, stock certificates, or official records from a brokerage or transfer agent. Transfers related to estate settlements may require legal documents such as a death certificate, probate court orders, or letters testamentary. For corporate securities, businesses may need to provide articles of incorporation, a corporate resolution authorizing the transaction, and proof of the signer’s authority.

Financial institutions may also request transaction-specific paperwork, such as a transfer request form completed by the receiving entity or an affidavit of ownership. If multiple parties are involved, such as joint account holders or executors of an estate, all relevant individuals may need to appear in person to provide signatures and supporting documents. Some institutions require notarization for certain forms.

Steps to Obtain the Guarantee

Before requesting a Medallion signature guarantee, individuals should confirm that the institution they plan to visit offers the service and whether an appointment is required. Many banks and brokerage firms have designated officers who handle these requests, but availability varies. Some institutions impose restrictions based on account history, meaning a customer may need to maintain a minimum balance or have an established relationship before being eligible.

Once eligibility is confirmed, applicants should gather all required documentation and ensure that any forms needing a signature are left unsigned until presented to the institution. Most financial institutions require signatures to be provided in person and witnessed by an authorized officer to prevent forgery. If the transfer involves a trust or power of attorney, additional legal documents may be necessary to prove the signer’s authority. Preparing all paperwork in advance minimizes the risk of rejection due to missing or incomplete information.

Cross-Border Transactions

Transferring securities across international borders introduces additional complexities, as different countries have their own regulations governing ownership verification and fraud prevention. While the Medallion signature guarantee is widely accepted in the United States and Canada, it is not universally recognized elsewhere. Investors transferring securities to or from foreign accounts may need to comply with alternative authentication methods, such as notarization, apostille certification, or local banking guarantees.

A U.S.-based investor transferring securities to a foreign beneficiary may need to provide additional documentation beyond the Medallion guarantee. This could include tax residency forms, proof of compliance with anti-money laundering regulations, or confirmation of the transaction’s legitimacy from a local regulatory body. Some countries impose withholding taxes or reporting requirements on cross-border securities transfers, affecting costs and processing time. Consulting a financial advisor or legal expert familiar with international securities regulations can help navigate these challenges.

Common Misconceptions

Many investors misunderstand the Medallion signature guarantee, leading to confusion and delays. A common misconception is that it functions like notarization. While both verify a signature, a notary public only confirms the signer’s identity, whereas a Medallion guarantee also certifies the legitimacy of the transaction and holds the issuing institution financially liable.

Another misunderstanding is that any bank or brokerage firm can provide a Medallion signature guarantee upon request. In reality, only institutions that are members of an approved Medallion program can issue these guarantees, and many limit the service to existing clients. Some investors also mistakenly believe that a Medallion guarantee is required for all securities transfers, when in fact, electronic transfers between brokerage accounts often do not need one. Understanding when and where this guarantee is necessary can help investors avoid unnecessary trips to financial institutions and streamline the transfer process.