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What are the rules concerning Medallion Signature Guarantees?
by Sam Ott and Ken Golliher, BOL Gurus

QUESTION: What are the rules concerning Medallion Signature Guarantees? Are they "know your customer"?

ANSWER by Sam Ott:
There are various Medallion signature guarantee programs. The Medallion imprint or stamp indicates that a financial institution is a member of a particular signature guarantee program and is an acceptable guarantor under the terms of that program. Each program will have its own rules and procedures regarding identification for its members to follow so there is not a set procedure. The SEC has posted a summary of signature guarantees and Medallion programs at

ANSWER by Ken Golliher:
A bit out of my element on this and would actually appreciate being followed up, (including being corrected) by someone who works with securities transfers routinely. In doing some research I found the following Q & A in some general literature on the subject: What is a "signature guarantee"?

A: It is a guarantee by a financial institution that your signature is genuine and the financial institution accepts liability for any forgery. It was the part about "accepts liability for any forgery" that caught my attention.

The information I have seen on the Medallion programs did not indicate what you should require for identification. I contacted the folks who manage the programs , but the person I spoke with was pretty guarded and would only say they had a book with some suggestions for security, but it could only be purchased by approved guarantors. The bankers I called whose institutions were approved each had different standards. None had seen "the book."

It appears the financial risk of guaranteeing the wrong signature is on your institution, not the medallion program; there may be no need for that organization to set standards, only make suggestions. What you require as identification may be purely a function of how much risk you want to take. (You can purchase surety bond coverage for this function.)

Given the guarantor's knowing acceptance of risk, my suggestion is that you use "Know Your Customer, squared" as the identification standard.

First published on 5/20/02

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