Convertible note

A convertible note is debt that can be exchanged for equity on stated terms. The manipulation risk lies entirely in the conversion formula: a fixed price is benign, a floating discount to market is not.

manipulation techniques · updated 2026-09-09

Where does convertible note come up?

This term is used in the following manipulation techniques, each explained in full on its own page.

• Dilution death spirals — A death spiral is a convertible instrument that converts into stock at a discount to the prevailing market price, so each conversion dilutes holders and pushes the price lower, entitling the holder to still more shares.

Enforcement actions involving these techniques

See also

• Death spiral financing — Death spiral financing is a convertible instrument that converts into stock at a discount to the prevailing market price, so that …
• Dilution — Dilution is the reduction in existing shareholders' proportional ownership when new shares are issued. It is a normal consequence …

Terms that refer here

Death spiral financing

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