Erasure Guarantee

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DEFINITION

A guarantee made by accredited institutions assuring the legitimacy and accuracy of changes made to bonds and securities. Erasure guarantees are used often in transferring securities. When an owner presents physical notes or share certificates as proof of ownership, special care is taken to ensure these documents are free of any corrections or erasures, particularly when significant sums of money are involved.

INVESTOPEDIA EXPLAINS

Banks and transfer agents for these securities may require an erasure guarantee, if there are any erasures or corrections on the document, to protect themselves against future claims if in the future it is determined that fraud has occurred. An erasure guarantee is similar to a document being witnessed by a notary public and typically takes the form of a medallion signature guarantee affixed to the erasure.


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