Signature Guarantees: Preventing the Unauthorized Transfer of Securities

If you hold securities in physical certificate form and want to transfer or sell them, you will need to sign the certificates or securities powers.  You will probably need to get your signature "guaranteed" before a transfer agent will accept the transaction. Although it's an inconvenience to get your signature guaranteed, the process protects you by making it harder for people to take your money by forging your signature on your securities certificates or related documents. Transfer agents insist on signature guarantees because they limit their liability and losses if a signature turns out to be forged. One way to avoid having to get your signature guaranteed is to have your securities held in street name, meaning that your securities are held in the name of your brokerage firm instead of your name.

An investor can obtain a signature guarantee from a commercial bank, savings bank, credit union, or broker dealer that participates in one of the Medallion signature guarantee programs. The leading Medallion signature guarantee programs are the Securities Transfer Agents Medallion Program (STAMP) whose participation includes more than 7,000 U.S. and Canadian financial institutions, and the New York Stock Exchange Medallion Signature Program (MSP) whose participants include many of the largest brokerage firms.  If a bank or other financial institution is not a member of a recognized securities guarantee program (such as banks overseas), it would not be able to provide signature guarantees.

A Medallion imprint or stamp indicates that the financial institution is a member of a Medallion signature guarantee program and is an acceptable signature guarantor. By participating in the program, financial institutions can guarantee customer signatures with the assurance that their guarantees will be immediately accepted for processing by transfer agents.

Transfer agents can refuse to accept a signature guarantee from an institution that does not participate in the Medallion program or that is not recognized by the transfer agent. While guarantor firms can charge a fee for their services, they often don't and offer them as part of their customer services.

If you have a question about signature guarantees, the Medallion Program, or if you have difficulty obtaining a Medallion signature guarantee, please contact the Shareholder Services Department of the company whose shares you own or its respective transfer agent.

http://www.sec.gov/answers/sigguar.htm