Tuesday, January 19, 2010

Notary Public vs. Medallion Signature Guarantee

From time to time, you may be asked by a customer if you do "signature guarantees". What they are really asking for is a "medallion guarantee", a process used to verify signatures on documents related to investment or security transfers. Medallion guarantees can only be performed by authorized officers of certain financial institutions; not all banks offer the service, and those that do require that the signer of the document be an established customer of the bank.

While one of the benefits of a notarized acknowledgment is that it provides the document recipient with peace-of-mind that the authorized person actually executed the document, the true purpose of acknowledgments is to determine willingness to sign, not necessarily the identity of the signer. Nor do medallion guarantees necessarily identify the signer, and they certainly do not determine willingness to sign. A medallion guarantee is simply a guarantee by a financial institution that the signature on a certain document is authentic, based on that person's signature on file with the bank. This makes the financial institution 100% liable for the total value of the security transfer in the event the signature is proven to be a forgery.

Whereas notaries are not concerned with the document being notarized, the officer giving a medallion signature guarantee will examine the document to ascertain the name of the investment/security firm and the total amount of the transaction. The offer is required to keep a journal of this information, as if the signature later turned out to be forged, the financial institution would be responsible for the total value of the transaction. A notarization is a public act administered by a state officer, whereas a medallion guarantee is a private verification of signature given by a financial institution.

However, similar to a notary seal, the medallion guarantee is accomplished with the use of an official stamp, whose design is determined by federal authorities, and which must be affixed with a special green ink to verify the stamp's authenticity. A sample of the stamp imprint is displayed to the left. The stamp is safeguarded by bank officials and typically only few bank officials are authorized to use it. The officer giving the signature guarantee is not required to complete any sort of notarial certificate. The stamp itself is proof of the entire act, unlike a notary seal, which by itself is meaningless.

If a client asks for one of these types of guarantees, you should refer them to their personal financial institution for more information.

2 comments:

  1. As you stated that about Notary Public vs. Medallion Signature Guarantee.I agree with you.A process used to verify signatures on documents related to investment or security transfers. Medallion guarantees can only be performed by authorized officers of certain financial institutions.the benefits of a notarized acknowledgment is that it provides the document recipient with peace-of-mind that the authorized person actually executed the document.

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