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

    Is Medallion Financial's Dividend Safe? (TAXI)

    Medallion Financial (NASDAQ: TAXI) specializes in providing loans for taxicab medallions, but also underwrites small business loans. Recently, medallion values have been decreasing, which could ...
  2. Insights

    What Is a Silver Certificate Dollar Bill Worth Today?

    Although a silver-certificate dollar bill no longer can be exchanged for silver, the date, grade and unique features make certain certificates very valuable.
  3. Insights

    Signature Bank Expands Client Banking Teams (SBNY)

    New York-based Signature Bank enhanced its private client banking network with the addition of three veteran bankers.
  4. Insights

    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.
  5. Retirement

    Don't Give Away Control Over Your Assets Without Planning

    Most people don't realize what they agreed to when they signed a power of attorney, and are blissfully unaware of the possible harm from poor planning.
  6. Investing

    Is the Price of Taxi Medallions Worth the Cost?

    Taxi medallions were once a fantastic investment. But is a crash on the way?
  7. Insurance

    Using Insurance in a Business Succession Plan

    How to use life and disability insurance to help fund a business succession or buyout plan.
  8. Insights

    Don't Sign That! Legal Pitfalls of Signatures

    Learn why using the wrong-color ink or signing for your spouse or child could trigger a fraud alert, nullify a check or get you in trouble. Find out all the legal pitfalls to signatures.
  9. Insurance

    8 Qualities That Make A Good Insurance Agent

    Insurance agents must possess each of the following qualities in order to be successful.
  10. Investing

    How Do Real Estate Agents Get Paid?

    Most real estate agents are paid a commission based on the sale price of a property and split between the agents and brokers involved.
Frequently Asked Questions
  1. Why can you short sell an ETF but not an index fund?

    Because you purchase and redeem mutual fund units from the mutual fund company and (generally) not on the open market, you ...
  2. How do I use Moving Average (MA) to create a forex trading strategy?

    Learn a simple forex trading that uses multiple moving averages and is designed to create low-risk, high-reward trading opportunities.
  3. What is the difference between derivatives and swaps?

    Swaps comprise just one type of the broader asset class called derivatives.
  4. What's the difference between a capital stock and a treasury stock?

    Learn about treasury capital stock, how to calculate a company's capital and treasury stock, and the differences between ...
Trading Center