guaranteed signature

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Guaranteed signature is a process of identity verification often used in the financial industry when transferring securities that are held in a physical document. Often, buyers and brokers alike require a guaranteed signature for purchasing securities to ensure the seller actually has valid ownership of the security. Financial institutions become qualified to guarantee signatures, usually through the Medallion program. Members of the Medallion program guarantee that the securities are valid and can be transferred to the buyer. If an issue later arises involving their validity, the financial institution who conducts the signature guarantee promises to cover the losses. Many banks will provide this service for their clients. Agreements vary regarding the amount in which financial institutions will insure against losses from an invalid signature, and therefore, an individual purchasing physical securities or serving as a broker should ensure that the financial institution sufficiently covers potential losses. 

[Last updated in February of 2022 by the Wex Definitions Team]