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Agenda Item
ASR
Control 23-000997 |
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MEETING
DATE: |
12/19/23 |
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legal entity taking action: |
Board
of Supervisors |
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board of supervisors district(s): |
All
Districts |
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SUBMITTING Agency/Department: |
Treasurer-Tax
Collector (Approved) |
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Department contact person(s): |
Shari
L. Freidenrich (714) 834-7625 |
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Dana
Schultz (714) 834-3514 |
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Subject: Approve Treasurer to Provide
Medallion Signature Guarantee Services to County
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ceo CONCUR |
County Counsel Review |
Clerk of the Board |
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Concur |
N/A |
Discussion |
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3
Votes Board Majority |
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Budgeted: Yes |
Current Year
Cost: $4,500 |
Annual Cost: FY 2023-24 $4,500 |
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Staffing Impact: |
No |
# of Positions: |
Sole Source: No |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: N/A |
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RECOMMENDED
ACTION(S):
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1. |
Authorize the continuance of the
Medallion Signature Guarantee Program, with Kemark Financial Services, Inc.
to remain a Securities Transfer Agents Medallion Program guarantor for a
subscription fee of $895 in FY 2023-24 and annually for the next five years
and re-designate the Treasurer-Tax Collector as the Securities Transfer
Agents Medallion Program Administrator and authorize the Treasurer-Tax
Collector to execute any agreements and any documents associated with this
program during this five year period. |
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2. |
Authorize the Manager of CEO/Risk
Management to annually obtain a Surety in compliance with the requirements of
the Subscription agreement and the Treasurer-Tax Collector. |
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3. |
Authorize the Treasurer-Tax Collector to
provide Medallion Signature Guarantee services in accordance with the terms
of the agreement only to County Departments on official County documents that
require a Medallion Signature Guarantee. |
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4. |
Authorize County Agencies and
Departments utilizing the Medallion Guarantee services to recover up to
actual costs when appropriate, subject to Auditor-Controller review and in
accordance with State and County laws and policies. |
SUMMARY:
Authorization of continued use of
this banking program will allow authorized officials to transfer securities
either donated to the County or transferred as part of estates or heirs as part
of fiduciary requirements in a timely and efficient manner.
BACKGROUND
INFORMATION:
The Board authorized the Treasurer
to implement this program in 2017 with Kemark Financial Services, Inc.
(Kemark), who is one of three providers of a Medallion Signature Guarantee
program. The program is known as the Securities Transfer Agents Medallion
Program (STAMP) and is administered by Kemark based in Florida. It includes more than 7,000 US and Canadian
Financial institutions. Under the program, there are costs for the
subscription, certain equipment and a surety bond. This contract does not
include subcontractors or pass through to other providers. See Attachment B for
Contract Summary Form.
The Treasurer-Tax Collector
(Treasurer) is required to obtain a medallion signature guarantee when the
County receives donated stock/bonds from individuals or companies and is
required to sell the stock/bonds upon receipt. In addition, the Public
Administrator and Public Guardian may need to sell stock/bonds as part of their
fiduciary responsibilities to their clients and also are required to obtain a
Medallion Signature Guarantee to transfer the securities. Finally, the
Treasurer needs a Medallion Signature Guarantee when purchasing US Treasury
Securities under the State and Local Government Series program.
Medallion
Guarantee Stamp
A Medallion Signature Guarantee is
a special stamp that indicates that the individual(s) signing a form has the
legal authority and capacity to conduct the requested transaction and verifies
the authenticity of the signature. The Medallion Signature Guarantee Stamp
guarantees that the individual signing the document is either the rightful
owner of the security, or they have the legal authority and capacity to conduct
the requested transaction. An authorized official will sign the Medallion Stamp
with their name and title printed beneath their signature. The verification is
a guarantee that the signature is genuine and the guarantor accepts liability
for any forgery. To protect again fraudulent signatures, certain legal
documentation is required be produced. The transfer of securities such as
stocks, bonds, options and other financial instruments generally requires this
special signature verification. This special signature verification is
currently generally done by financial institutions as part of their banking
operations.
As the County Program
Administrator, the Treasurer will perform due diligence on each medallion
signature request and provide the medallion signature guarantee stamp only to
County departments and agencies needing it to complete a securities transfer or
signature guarantee. The Treasurer will have County Counsel review the
documents each time to ensure that the person has the legal capacity to sign
prior to stamping and signing the form.
There have been 13 medallion stamps signatures that have been processed
under the program since inception. The
majority of these have been for the Public Administrator. This program enables them to efficiently
transfer securities from a decedent’s name to the estate name once the Public
Administrator is court appointed for the probate process.
Program Costs
The costs are minimal for the
program and consist of the cost of the surety bond, the annual STAMP
subscription cost, and any training or education costs, which are estimated to
be less than $4,500 annually.
Non-Standard
Indemnification Clause
The agreement previously signed
upon the implementation of this program is a standard agreement provided by
Kemark for these services. There are no new documents required to be signed to
continue this program, it only requires a surety bond and payment of the annual
subscription fee. The terms and
conditions in the agreement signed deviate from the County’s standard terms and
conditions including indemnification provided to another party and the
limitation of liability. Risk Management
and County Counsel have reviewed the agreement and determined that Board
approval is required. Their concern is that the liability to the County should
the Stamp be used inappropriately and the very broad indemnity language in
favor of the issuer of the Surety bond pose increased risk to the County as
compared to the County’s standard indemnity agreement where no such indemnity
is provided. However, there are two major factors included in the
recommendations that limit and mitigate the County’s liability risk under the
Kemark Indemnification clause:
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1) |
The limiting of
the provision of Medallion Signature Guarantee Services by the Treasurer to only
County Departments, and; |
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2) |
The review and
update as needed by the Treasurer of the written policies and procedures for
use, custody and safekeeping of the Medallion Signature Guarantee Stamp. |
These actions, in conjunction with
the Treasurer’s due diligence and requiring a County Counsel review of the
subject documents to ensure that the person has the legal capacity to sign
prior to stamping and signing the form significantly limit the County’s risk.
We believe due to the limited risk and the benefits that will be received, it
is in the County’s best interest to approve the agreement.
Other Benefits
Maintaining the Medallion program solves
security transfer issues that exist statewide for Public Administrators and
Treasurers in other counties. The County of Orange, with Board approval in
2017, was the first government agency to receive approval to join the program
and other counties, including the Los Angeles County Treasurer have now been
approved by Kemark to join the program.
FINANCIAL
IMPACT:
Appropriations
are included in the Treasurer FY 2023-24 Adopted Budget and will be included in
the budgeting process for future years. The Treasurer is fully reimbursed for
the costs by billing the appropriate agency or department for their time and
can absorb the cost with no net county cost impact. The specific agency or
department will accordingly bill the third party as part of their fiduciary
duty.
STAFFING
IMPACT:
N/A