I’ve talked to a couple of members of late about doing a “Signature Guarantee” and found them to be somewhat confused as to exactly what the service was and the exposure the credit union has by providing the service. We typically use the term Signature Guarantee to refer to what is technically known as a Medallion Signature Guarantee. In years past there was “Signature Guarantee” process that was done by financial institutions that would guarantee a particular check, sometime called a certified check. The process allowed an individual to take a blank check to something like an auction and fill in the amount up to a prescribed limit where the seller knew they would be guaranteed funds. With the plethora of ways funds can be transferred these days, that method has largely fallen by the wayside.
In any event, the Medallion Signature Guarantee program which we do provide to members with appropriate documentation, is provided by the Securities Transfer Association. It allows the transfer of stocks, IRA transactions, and bonds remotely where the company performing the transaction doesn’t have a face to face relationship to the person requesting the transaction. The business relies on intermediaries like Oregonians to assist in the confirmation of a person’s identity and authority to perform the transaction.
You will see in the final row of the items listed below, that the financial institution's assets back the transaction. In other words if we guarantee a signature under the Medallion program, we are on the hook for the amount of that transaction! In other words, the business who wants and needs the transaction to be performed transfers the liability for that transactions to Oregonians Credit Union despite the fact that we provide it as a free service. Keep in mind that these transactions can run upwards of a $1,000,000. It’s important that we all know the difference between the Notary services and the Medallion Signature Guarantee service and communicate this and confirm the member's request and the need for the guarantee. I’ve talked to a few members who didn’t initially understand why we would require the level of documentation we do, and why we might not do a guarantee for someone who is not a member or who has a very limited relationship with us. We have to have an extremely high level of confidence in the member, the transaction that is being requested and the process by which it is being done.
In short, we are Guaranteeing the transaction with no transaction benefit.
Please read the following and let us know of any questions via the ask submission.
NOTARY |
MEDALLION SIGNATURE GUARANTEE |
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WHO? |
Any bank employee authorized by the State as a notary |
Generally only a Bank Officer unless the entity providing the guarantee decides otherwise. |
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WHAT? |
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| A signature and seal provided by a Notary Public signifies that the signature is genuine, because the person actually signs in the presence of the notary and provides positive proof of identity. |
Authenticate the signature and capacity of a person requesting the redemption or transfer of securities. Its use protects the issuer of the security; the owner(s) of the security; and transfer agents because a guarantee limits their liability and losses if a signature turns out to be forged. |
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UCC WARRANTEES? |
None |
Signature was genuine-means that the person signed in your presence and that you identified that person |
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Signer was the appropriate person– Means that the person signing the security was either the named owner of the security or that you reviewed documentation establishing legal ownership, such as a Will, Trust, etc. | ||
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Signer had legal capacity-Means that the person signing was of legal age, sane, sober, of sound mind and under no legal handicap or duress. Remember that a contract involving a minor is voidable by the minor but binding on the other party | ||
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REGULATED BY? |
State |
STAMP, |
| KEMARK | ||
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BOND REQUIRED? |
No |
Yes, in the amount of the bank’s Medallion Guarantee |
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FEE ALLOWED? |
Yes, set by State law |
Yes- a “reasonable” fee may be charged. |
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RECORD RETENTION? |
Notary Log recommended – generally set by state law |
Strongly recommended. Documents relied upon as well as the actual documents guarantees should be retained by the guaranteeing institution under the “paperless” program. |
| Copies of documents notarized not required | ||
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DOLLAR LIMITS? |
No |
Yes – a FI should not guarantee anything exceeding the amount of its bond. |
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EQUIPMENT PROTECTED? |
Each notary should secure his or her own notary equipment |
Yes- treat the STAMP like cash. Secure under dual control if possible. |
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OFFICIAL STAMP REQUIRED? |
Yes |
Yes |
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TRAINING REQUIRED? |
Regulated by State law- generally, no. |
Yes – each employee who is authorized to perform a Medallion Guarantee must be certified. |
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IDENTIFICATION REQUIRED? |
Yes |
Yes |
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PERSONAL LIABILITY FOR FRAUDULENT TRANSACTIONS? |
Yes |
No, but all assets of your Financial Institution are available to remedy any fraudulent transfer. |