Amarin Corp Plc (AMRN)

[jessellivermore]

Re: The short sale hedge of "convertible notes...

Source is.."More Money than God": Sebastian Mallaby: Penguin Books,2010

Page 364...background..Circa Sept 2008, Bear Sterns has fallen and Lehman is next in line, both victims of the "subprime" crisis and their own trading practices (using 30X leverage)...Goldman looks like its next man up on the block...Both Bear and Lehman blame the problem on "short selling conspirators"..

So the Financial Services Authority in London announced a thirty-day ban on short selling of twenty-nine finacial firms. Signaling they would now do whatever necessary to save the flagship companies. Later, the same day the SEC banned the short selling of about eight hundred financial companies..

Page 365...The effect.. Quote.."Citadel had built up a giant profile of convertible bonds (notes), which it hedged by shorting stocks: The idea was the options embedded in the bonds were under priced relative to the underlying equity. The ban on short selling made it impossible to hedge new convertible positions, so demand for the convertible notes cratered."

This is the grim reality of "convertible notes" their value is tied to the short hedge...When the SEC stopped the short hedge, by making the practice illegal it put many funds who rely on this hedge out of business out of business.

This is also the case for Amarin's convertible notes...That is the majority of the note holders are short the common..and even if they sell their shares they still need to cover their short position..Without the 3.5% the hedge does not make much sense...So we may actually get (as I earlier mentioned) a squeeze of sorts...

":>) JL