Ellington Financial Inc

Authorizing us to issue more Common Shares than currently authorized by the Charter will not affect materially any substantive rights, powers or privileges of our stockholders. Our Common Shares do not have cumulative voting rights or preemptive rights for the purchase of additional shares of any class of capital stock. The additional Common Shares for which authorization is sought are identical to the Common Shares now authorized. However, the issuance of additional Common Shares may, among other things, have a dilutive effect on the earnings per share and voting power and/or may adversely affect the market price of our existing equity securities. There can be no assurance that offerings of Common Shares will in fact be accretive to our stockholders.

On the other hand, if we do not receive stockholder approval on this Authorized Shares Amendment Proposal, we will be hindered in our ability to raise capital to pursue new investment opportunities that could be beneficial to us and our stockholders, or in certain circumstances from raising capital to reduce leverage, if market conditions warrant. This reduced flexibility would also put us at a competitive disadvantage to our peers. From the date of the proxy statement until the date of our Annual Meeting, we may offer to the public authorized but unissued Common Shares in one or more public offerings, including through underwriters or our two registered at-the-market offering programs.