Q Warns of Stock Getting 'Naked'

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Startup gay pay cable net Q Television is trying to make sense of some unusual trading in its stock.

It has launched an investigation into possible manipulation of the market by "naked" short sellers.

Q TV is a penny stock, trading in the cloudy over-the-counter "pink sheets" market, where information is much harder to come by than for stocks traded on larger exchanges. 

Q TV trades for around 2/10ths of a cent per share, but has billions of outstanding shares and often trades hundreds of millions of shares per day.

Q TV officials believe the stock is the subject of "naked" short selling, sales by investors who claim to hold or to have borrowed shares so there is no limit to what they can sell. Naked short sellers bet that the stock price will drop quickly, letting them buy the shares more cheaply than they sold them for, pocketing the difference.

Short selling is a common practice, but "naked" selling of shares never borrowed or owned is largely against securities rules.

 "Q Television is taking aggressive steps to stop any inappropriate  selling," the company says in a statement. "Q will, to the best of its ability, start an investigation to flush out any inappropriate sales, thus ensuring that every share is purchased and paid for before it is resold on the market."

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