Glossary of Municipal Securities Terms

VALIDATION

(1) A procedure followed in certain states whereby the legality of a proposed issue of securities may be determined, often through a court proceeding, in advance of its issuance.

(2) A procedure whereby a certificate or coupon issued in physical form that has been torn or otherwise damaged (“mutilated”) is endorsed as being a valid or binding obligation of the issuer. Validation of damaged certificates is normally done by the issuer or its agent (e.g., the paying agent, trusteeregistrar or transfer agent); validation of damaged coupons may also be done by a commercial bank. See: CERTIFICATED SECURITY.

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