Bermuda?s LOM Holdings denies allegations presented at a hearing in Canada last week that it is contacted to an alleged Mafia-linked securities violator.

British Columbia Securities Commission (BCSC) director of enforcement Sasha Angus alleged LOM?s ties to Philip Gurian during a hearing before three BCSC commissioners. They are looking into alleged non-compliance by LOM (Holdings), LOM Securities (Bahamas) Ltd., LOM Securities (Bermuda) Ltd., LOM Securities (Cayman) Ltd., Lines Overseas Management, Donald P. Lines, Brian N. Lines, Scott G.S. Lines, Malcolm Moseley, David McNay and J. Scott Hill.

After LOM failed to supply the BCSC with information regarding the subject of its securities investigation San Telmo, Mr. Angus says that the BCSC issued an investigation order aimed at San Telmo and the LOM Companies, Donald Lines and others, including Janice Gurian and Philip Gurian.

A Stockwatch report said that Mr. Gurian is an alleged Mafioso, whose name came up 209 times in the BCSC?s just-completed hearing into Pacific International Securities. His name is allegedly linked to HiEnergy Technologies ? one of three securities that the US Securities and Exchange Commission has asked LOM for information on as part of a separate SEC investigation into alleged fraud and market manipulation with those securities.

Scott Hill, executive vice president group compliance for LOM, told this newspaper that the insinuation by BCSC that Mr. Gurian ?either had accounts with LOM or was somehow involved with LOM officers is entirely false?.

He said: ?LOM wants to make clear that the damaging insinuation that LOM is in any way linked to Gurian or his associates is entirely false. Neither LOM nor any of its staff have accounts for, have done business with, have knowledge of, or have associated with Gurian or his associates.?

Mr. Hill said that the BCSC staff?s ?continuing malicious inferences can only be meant to divert attention from the real issue at hand, which is an important one of procedure and international law? and that there is no wrongdoing alleged against LOM or its officers regarding trading in San Telmo Resources Inc.

The BCSC panel has reserved its decision on whether LOM and the named individuals have contravened its Securities Act, RSBC 1996 in relation to its investigation of San Telmo Energy. It will also determine whether it is in the public interest to order the LOM and its executives to cease trading in and be prohibited from purchasing any securities or exchange contracts in the province. BCSC staff also want an indication that LOM and the individual respondents would comply with B.C. laws in the future with $100,000 in penalties for all of the corporate respondents, and $10,000 for each individual.

LOM says the hearing is simply a matter of procedure and policy and focuses on whether the BCSC has authority to require LOM to provide confidential customer information directly to the Commission on request, bypassing established, legal mechanisms for such requests.

LOM argues that it has been seeking to co-operate with the BCSC ?in as expeditious a manner as possible? that does not put LOM in jeopardy of breaching the laws of Bermuda, Bahamas and the Cayman Islands, its operating jurisdictions.

Mr. Hill said: ?All of the BCSC?s demands have in fact been satisfied through requests for assistance made of the regulators in Bermuda, Bahamas and the Cayman Islands. LOM actively encouraged the BCSC to make the requests for assistance through these proper, established channels. LOM complied forthwith once it received lawful demands from these regulators.?

Mr. Angus however argued to the contrary during the hearing, but Mr. Hill says that it was improper to put LOM in the impossible position where it either faces penalties in British Columbia, or else break the laws in the jurisdictions in which it operates.

?Finding against LOM in this matter would set a precedent for all foreign in investment firms dealing in the Canadian markets,? he said.

According to LOM?s counsel, many of the BCSC staff?s points during the hearing were entirely irrelevant to the matter at hand, were inaccurately portrayed, and were seemingly included in an effort to smear LOM?s name and take attention away from the issue that was in fact at stake.

He said: ?They went into great detail regarding some of the Canadian brokerage houses through which LOM executes transactions, indicating that LOM was the legal owner of the accounts, but there were other behind-the-scenes owners, inferring that there was something improper or nefarious about this. In their own affidavits, they confirm that in the account documentation setting up such accounts, this was properly disclosed - i.e. a single account at each firm is in the name of LOM, with disclosure that LOM is a broker-dealer and therefore the transactions flowing through the accounts are ultimately on behalf of its customers, not itself. This is a simply how the industry works on an operational level.?

Mr. Hill also said that Mr. Angus? comment that LOM ?whipped up? a lawsuit and served it on the Bermuda Monetary Authority in order to prevent the BMA from assisting the BCSC is entirely false. He says that following receipt of a legal opinion in November 2003 LOM concluded that it exposed itself to potential liability from customers if it continued to comply with the requests as the law was then written, without seeking proper clarification.

Mr. Hill said that LOM commenced proceedings in the Bermuda Supreme Court in order to clarify the issue once and for all. In August, 2004, the Bermuda legislature amended the law, and LOM says that it then immediately provided the information to the BMA that had been requested regarding San Telmo.