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.

	Securities Transfer Agents Medallion Program (STAMP) whose participants include more than 7,000 U.S. and Canadian financial institutions.
	Stock Exchanges Medallion Program (SEMP) whose participants include the regional stock exchange member firms, and clearing and trust companies.
	New York Stock Exchange Medallion Signature Program (MSP) whose participants include NYSE member firms.

If a financial institution is not a member of a recognized Medallion Signature Guarantee Program (such as an overseas bank located outside of North America), it would not be able to provide signature guarantees. Also, if you are not a customer of a participating financial institution, it is likely the financial institution will not guarantee your signature. Therefore, the best source of a Medallion Guarantee would be a bank, savings and loan association, brokerage firm, or credit union with which you do business.

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 general questions about Medallion signature guarantees or how the Medallion program works, you can send an email to Kemark Financial Services, Inc., the program administrator for STAMP and SEMP, at contactkfs@kemark.com. For specific questions about a security, the Shareholder Services Department of the company whose shares you own or its respective transfer agent may be best suited to assist you.

Foreign signature guarantee problems.

As noted, an investor located outside of North America may have difficulty obtaining the services of a signature guarantor, especially if the investor has no business connection with a North American financial institution.  This means the investor may be unable to effect the transfer of securities.  Remedies for this problem can be expensive, such as, costs for the investor traveling to North America or engaging a lawyer in North American.

To address this situation, First Global Program, Inc. was recently created.  First Global Program, a privately-held corporation located in New York State and affiliated with Kemark, provides insurance policies for foreign investors who seek to transfer securities in North America with the insurance serving as a replacement for signature guarantees.  Fees and other details concerning the program are available on the program’s website.

The SEC provides Kemark’s email address for information purposes only. We cannot endorse any commercial entity, and we do not endorse or recommend any of its products or services.  In addition, the SEC does not endorse or recommend First Global Program’s products or services, and provides information for those who may wish to explore this alternative.

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