What is an appropriate record retention period for original medallion paperwork? Would you recommend the same retention period for virtual copies? We reached out to the Securities Transfer Agents Medallion Program (STAMP), and they stated: “Time of retention is a decision made by the institution itself in accord with your own legal, risk management and audit procedures.”

We are not aware of any law that directly addresses the retention period for documents related to medallion signature guarantees, other than the SEC’s requirement that securities transfer agents retain records related to rejected transfers for three years following the date of rejection.

That said, a medallion signature guarantee creates unique, direct liability on the part of the bank that may warrant permanent retention. Under the Illinois Uniform Commercial Code, a person who guarantees a signature of an indorser of a security certificate warrants that at the time of signing, the signature was genuine, the signer had legal capacity to sign, and the signer was an appropriate person to indorse the security certificate. Also, the STAMP Program Indemnity Agreement requires your bank to indemnify issuers and transfer agents for losses resulting from their reliance on a medallion stamp. Due to the warranty and indemnity obligations connected with the use of medallion signature guarantees, we recommend permanent retention of all signature guarantees and supporting documentation. The IBA’s Guide to Bank Record Retention also recommends indefinitely retaining associated log books and log sheets when a bank performs a medallion signature guaranty.

Additionally, the general rule under Illinois law is that electronic versions of documents have “the same force and effect under the laws of this State” as documents in writing. The Illinois Uniform Electronic Transactions Act (UETA) also provides that an electronic record will satisfy a law requiring a record to be retained if it accurately reflects the information in the record and remains accessible for later reference. Accordingly, we also recommend permanent retention if your bank decides to retain signature guarantees and supporting documentation in electronic form.

For resources related to our guidance, please see:

SEC Regulations, 17 CFR 240.17Ad-15(e)(3) (“Every registered transfer agent shall maintain, for a period of three years following the date of the rejection, a record of transfers rejected, including the reason for the rejection, who the guarantor was and whether the guarantor failed to meet the transfer agent's guarantee standards.”)

Illinois Uniform Commercial Code, 810 ILCS 5/8-306(a) (“A person who guarantees a signature of an indorser of a security certificate warrants that at the time of signing:

(1) the signature was genuine;

(2) the signer was an appropriate person to indorse, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person; and

(3) the signer had legal capacity to sign.”)

Securities Transfer Association Guidelines, The Program Indemnity Agreement, page 94 (June 8, 2023) (“The Program Indemnity Agreement obligates the guarantor to protect any indemnitee against loss suffered in reliance on a medallion imprint when used ‘. . . for the purpose of executing guarantees of signatures (within the meaning of Section 8-306 of the Uniform Commercial Code) and for the purpose of executing other certifications and guarantees incident to the transfer, payment, exchange, purchase or delivery of securities, including, but not limited to, erasure guarantees and one-and-the-same guarantees, . . .’”)

IBA Guide to Bank Record Retention 2013–2014 (“Log Book, Log Sheets (maintained when a Bank performs a Medallion Signature Guaranty) Recommendation: “Indefinite”)

Financial Institutions Electronic Documents and Digital Signature Act, 205 ILCS 705/10(a) (“If in the regular course of business, a financial institution possesses, records, or generates any document, representation, image, substitute check, reproduction, or combination thereof . . . that accurately reproduces, comprises, or records the agreement, transaction, act, occurrence, or event . . . [it] shall have the same force and effect under the laws of this State as one comprised, recorded, or created on paper or other tangible form by writing, typing, printing, or similar means.”)

Uniform Electronic Transactions Act, 815 ILCS 333/7(a) (“A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.”)

Uniform Electronic Transactions Act, 815 ILCS 333/12(a) (“If a law requires that a record be retained, the requirement is satisfied by retaining an electronic record of the information in the record which: (1) accurately reflects the information set forth in the record after it was first generated in its final form as an electronic record or otherwise; and (2) remains accessible for later reference.”)