When transferring securities or other valuable financial assets, transaction validation is essential, and Notarisation and Medallion Signature Guarantees (MSGs) are two commonly used methods. Although both methods help verify identities and prevent fraud, they serve different purposes and are not always interchangeable. Continue reading to learn more.
What is a Medallion Signature Guarantee?
A Medallion Signature Guarantee is a special certification provided by participating financial institutions that confirms the identity and authority of the individual requesting a securities transfer. You can learn more about how this process works by reading our guide to the Medallion Signature Guarantee. There is more to the MSG process than just verifying an identity. The bank will:
- Verify your identity by presenting a government-issued photo ID.
- Confirm your legal authority to transfer the asset. This may involve reviewing account documentation or ownership records, such as account statements or tax filings.
- Witness your signature – A bank employee witnesses you while you sign the documents.
After completing these steps, the bank attaches the MSG stamp, signifying that they have confirmed the signature’s authenticity and the signer’s legal capacity. Because of this additional level of verification, MSGs are typically required when transferring valuable securities such as stocks or bonds. You can read more about Medallion Signature Guarantees and investor protections here.
Notary Public
A notary public is an official who verifies identities and witnesses document signatures. Typically, the notarisation process comprises:
- Verifying your identity: Similar to an MSG, a notary will confirm your official identification.
- Witnessing your signature and applying their official stamp or seal to confirm the signing took place in their presence.
Unlike MSGs, notaries do not ask if you may lawfully transfer assets. A notary stamp just certifies that you are who you say you are and that you voluntarily signed the document in their presence.
Choosing the Right Option
An MSG or a notary may be chosen, depending on the type and amount of the asset being transferred. Here are some things to consider:
- High-value assets: An MSG is recommended for stocks, bonds, or other notable holdings due to its comprehensive verification process.
- Lower-value or general documents: A notary stamp may be sufficient.
- Property transfers: These typically require notarised documents and additional legal procedures rather than Medallion Signature Guarantees.
- Convenience: Compared to banks offering MSG services, notaries are frequently easier to locate.
- The cost of notarisation and MSGs can vary. Some banks provide MSG services free to existing customers, while notary services typically charge a small fee.
Consult a financial advisor or legal professional to determine the best secure transfer method for your situation. Additional investor education resources can be found on the U.S. Securities and Exchange Commission website.