A signature guarantee is a type of guarantee for securities transfers and other transactions where documents must be signed by an authorized signatory of a financial institution or other approved entity.
The purpose of the signature guarantee is to protect a customer, investor or seller from fraudulent activity by verifying that the signature is genuine and the signatory has the authority to enter into the transaction. Signature guarantees are often required by the transfer agent, brokerage firm or other entity with which the transfer is taking place.
What Is the Process for Getting a Signature Guarantee?
To get a signature guarantee, a person typically must go to an authorized financial institution or approved entity. Examples of authorized financial institutions include banks, credit unions and brokerages.
The individual must typically present acceptable proof of identity, such as a driver’s license, and fill out paperwork detailing the account and transaction they’re taking part in. The financial institution may also require additional documentation, such as current account statements, depending on the transaction.
Common Transactions That Require a Signature Guarantee
Some of the most common types of transactions that require a signature guarantee include:
- Transferring assets from one person to another
- Transferring stock or other securities
- Liquidating securities or transferring ownership
- Transferring funds from one financial institution to another
The Impact of a Signature Guarantee
Using a signature guarantee can have major implications in protecting the customer, investor or seller from fraud. Signature guarantees protect against forged documents, unrealistic promises, and other deceptive actions that could lead to financial losses.
Getting a signature guarantee can also add credibility to a transaction or document. It helps to show that the parties involved are legitimate and the transaction is valid. This can be especially important for complex or high-value transactions.
Conclusion
A signature guarantee is a type of guarantee typically used for securities and other transactions that verifies that the signature is genuine and that the signatory has the authority to enter into the transaction. It can help to protect customers, investors or sellers from fraudulent activity and also adds credibility to the transaction.