Investors sometimes hold securities in a physical form such as paper stock certificates. You must get a signature guarantee before you can sell or transfer ownership of the shares. The transfer agents that handle securities transactions require a signature guarantee issued by a financial institution that takes part in a Medallion Signature Guarantee program. The guarantee verifies that you are the person who signed the securities documents and that you are authorized to dispose of the shares. Transfer agents will not accept a notarized signature in lieu of a signature guarantee.
Who Offers Signature Guarantees
The U.S. Securities and Exchange Commission says there are a variety of financial institutions that offer signature guarantees, including:
- brokerage firms
- commercial banks
- credit unions
- savings and loan institutions
- trust institutions
Select a financial institution where you have an account because signature guarantee providers usually restrict this service to existing customers. They can charge a fee but often do not -- signature guarantees are part of many institutions' normal customer services.
Signature Guarantee Requirements
You must provide documentation to get a signature guarantee. If stock certificates or other securities are registered in your name with the transfer agent, you might need only show identification and complete a transfer of ownership form. However, documentation requirements vary with the type of transaction. For example, if you are the executor of an estate and need to transfer ownership of securities to heirs, you will have to provide a death certificate as well as a letter from the probate court authorizing you to act as the decedent's representative. The best course of action is to contact the institution where you will obtain the signature guarantee and ask what documents you need to bring.
Obtaining the Guarantee
Take the securities and required documents to the signature guarantee provider. An authorized employee of the financial institution will verify your identity and that you are entitled to authorize the securities transaction. Sign stock certificates and other forms only in the presence of the person issuing the signature guarantee. Once the signature guarantee imprint or stamp has been affixed , mail the securities and related documents to the address provided by the transfer agent. To be safe, use certified or registered mail and insure the package.
A signature guarantee from a Medallion Guarantee Program includes surety bond protection for the transfer agent in the event a signature is fraudulent. Be sure the the signature guarantee protection is equal to or greater than the value of the securities. If it isn't, the transfer agent won't accept the signature guarantee.