All securities delivered by a customer or another broker dealer must be in good condition and must:

  • Be signed by all owners and all owners must be alive
  • Be in the correct denominations, i.e. number of shares or par value of bonds
  • Have all attachments
  • Be accompanied by a uniform delivery ticket

The owner of a security must endorse the certificate at the time of sale to ensure its negotiability or may sign a stock or bond power also known as a power of substitution.

The stock power, when attached to the certificate, will make it negotiable and includes an irrevocable power of attorney. All signatures must be accepted by the transfer agent. To ensure that the transfer agent accepts the signatures on certificates delivered by NYSE member firms, the NYSE started the Medallion Signature Guarantee Program, which allows NYSE members to stamp the certificates with a medallion rather than sign them. This stamp ensures that the transfer agent will accept the certificates for transfer and provides indemnification insurance for fraud. The Medallion Program members pay a fee to participate in this program.

Examples of invalid signatures are:

  • The signature of a minor
  • The signature of a deceased person
  • The signature of only one owner if jointly registered
  • A forged signature

 



Introduction

Related Articles
  1. Investing

    Will Ride Sharing Crush Medallion Financial?

    Driving a taxi cab is far from a glamorous business, but in many areas of the country, it's a business that involves a lot of money.
  2. Investing

    Old Stock Certificates: Lost Treasure Or Wallpaper?

    What if you've discovered some old shares in bearer form? Follow our tips and find out what they're worth.
  3. ETFs & Mutual Funds

    What Does a Transfer Agent Do?

    Transfer agents maintain the records and documents related to shareholder accounts.
  4. Investing

    Old Stock Certificates: Lost Treasure?

    Today, most stocks reside electronically in a broker’s computer. But it is possible to stumble across a physical stock certificate.
  5. Personal Finance

    How NYC's Yellow Cab Works and Makes Money

    Owning a New York City cab can be a great low-risk investment if you can afford the cost of a medallion.
  6. ETFs & Mutual Funds

    The 4 Ways To Buy And Sell Securities

    Know the four main avenues of buying and selling investment instruments.
  7. Entrepreneurship & Small Business

    5 Reasons Small Business Owners Sell Their Companies

    Selling a business you've built from scratch isn't done lightly. Consider these moments when the opportunity might be right for you.
  8. Personal Finance

    Getting A Loan Without a Parent's Signature

    When you know what lenders are looking for, it’s quite possible to obtain a loan without your parents’ signature.
  9. Personal Finance

    Understanding Endorsements

    In financial terminology, endorsement has a couple of different meanings.
  10. Retirement

    Why Designate a General Power of Attorney?

    Because it will ensure your financial and personal affairs are handled according to your wishes should you ever be incapacitated or unavailable.
Trading Center