AGO 051.

• Case Date: August 09, 1993
• Court: North Carolina

North Carolina Attorney General Opinions 1993. AGO 051. August 9, 1993Attorney General Letter Opinion No. 051Honorable George T. Mann Administrator Credit Union Division North Carolina Department of Commerce 1110 Navaho Drive, Suite 300 Raleigh, North Carolina 27609Re: Advisory Opinion - Authority of State-chartered Credit Unions to Act as Signature Guarantors for Securities Transfers; Subchap. III, G.S. Chap. 54.Dear Mr. Mann: You have requested in your letter of July 27, 1993, that this office provide an opinion whether State-chartered credit unions are authorized to act as signature guarantors for securities transfers by their members. According to the information accompanying your letter, the signature of an owner who wishes to transfer any type of security must be guaranteed by an entity acceptable to the transfer agent handling the transfer. Historically, the only guarantees of signatures on securities that were generally acceptable were those provided by commercial banks, trust companies, and broker/dealers of certain stock exchanges. The Securities and Exchange Commission promulgated a rule, however, effective February 24, 1992, which requires transfer agents to accept signature guarantees from qualified credit unions. It further appears from the information furnished with your letter that a credit union acting as a signature guarantor may be financially liable for wrongful guarantees. As conditions for becoming an entity qualified to act as a guarantor, therefore, a credit union must enter into an indemnity agreement and must obtain a surety bond to protect the transfer agents and other financial institutions that rely on the guarantee from loss if the credit union guarantor is unable to meet its obligations under the indemnity agreement. It is generally held that financial institutions are wholly creatures of statute, Young v. Roberts, 252 N.C. 9, 13, 112 S.E.2d 758 (1960); Pue v. Hood, 222 N.C. 310, 313, 22 S.E.2d 896 (1942); 13 Am.Jur.2d Building and Loan Associations § 6, and...