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Individual Investors Seeking Medallion Signature Guarantees

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The STA frequently receives inquiries from investors seeking a list of Medallion Signature Guarantee (“MSG”) Program Participants located within a certain geographic area. Unfortunately, such a list is not available and would be ineffectual for the following reasons:

  • Since a Guarantor bears the liability for losses arising directly from a wrongful transfer of securities pursuant to a signature guarantee of a forged or otherwise ineffective endorsement, each Guarantor establishes policies and procedures for the issuance of MSGs in accordance with its own criteria.  Typically, this is a service offered by Guarantors for their customers.
  • Since the legal effect of a signature guarantee (as codified in Uniform Commercial Code Section 8-306) is far broader than that of a notary or other bank certification, the due diligence process is correspondingly more rigorous. For some Guarantor institutions, qualifying an individual for an MSG is not unlike qualifying an individual for a loan.

For Investors located within the United States and Canada
Investors located within the United States and Canada are advised to contact their own financial institution (bank, credit union, or broker/dealer) to determine if that institution is a participant in an MSG Program.  Nearly 5,500 firms, including virtually all of the large financial institutions within the U.S. and Canada, participate in an MSG Program.  Sometimes, procuring an MSG will necessitate that an individual establish a “continuing business relationship” with an MSG Program member firm.  Often times, however, individuals need look no further than their local broker, credit union or bank branch.

For Investors located outside of the United States and Canada
For investors located outside the United States and Canada, a branch of a U.S. or Canadian bank, credit union, or broker/dealer with whom the investor has a continuing business relationship might be a source of an MSG.  Alternatively, a local financial institution with whom the investor has a continuing business relationship, and that has a correspondent relationship with a U.S. or Canadian MSG Program member might be a source of an MSG.  In addition, the MSG Program has recently been opened to certain qualified institutions located outside of the U.S and Canada. Therefore, investors may wish to contact the Shareholder Services area of the Transfer Agent requiring the MSG to ascertain if there are any firms within their country (most are currently located within the United Kingdom) that may be a potential new source of an MSG.

In Conclusion
Generally, those individuals who experience the most difficulty are those who conduct business only with banks who have made a conscious decision not to provide this service by not participating in an MSG Program and those living in foreign jurisdictions where an MSG provider is not yet available.  If none of the above are viable options, investors should seek assistance from the Shareholder Services area of the Transfer Agent or Issuer requiring the Medallion Signature Guarantee.