Lines Overseas Management has vowed to fight charges of securities fraud filed by the United States Securities and Exchange Commission, claiming they are "legally and factually unsound" and are part of a "longstanding pattern of harassment against LOM and its officers".

The Hamilton-based offshore financial services group, including defendants brothers, president Scott, and Brian Lines, Lines Overseas Management Ltd., LOM (Holdings) Ltd., LOM Capital Ltd., LOM Securities (Bermuda) Ltd., LOM Securities (Cayman) Ltd. and LOM Securities (Bahamas) Ltd., was alleged to have taken part in two fraudulent schemes to manipulate the stock prices of microcap companies Sedona Software Solutions Inc. and SHEP Technologies Inc, in a civil injunctive action filed by the SEC in the US District Court for the Southern District of New York.

The complaint also claims that defendants Anthony Wile, Wayne Wile, Todd Peever, James Curtis and Robert Chapman engaged in market manipulation and the SEC also filed settled civil injunctive actions against John Cooper, Ian Park, Lawrence Isen and Sedona.

But, in a statement released yesterday, LOM announced its intention to contest the charges, with chief financial officer of LOM Malcolm Moseley welcoming to the chance to clear the company's name.

"The complaint files by the SEC presents a disturbingly distorted portrayal of a bona fide financing transaction in which LOM participated nearly five years ago," he said.

"We are deeply frustrated by the SEC's action today, and look forward to having an opportunity, after nearly five years of investigation, to challenge the SEC's allegations and demonstrate that LOM and its five agents operated at all times in the best interests of our clients.

"LOM welcomes the opportunity at long last to be able to present its side of the story in an adversary proceeding before a neutral judge."

The SEC alleged LOM and the related parties received "illegal proceeds" totalling around $5.8 million from two stock manipulation schemes involving companies, namely Sedona and SHEP.

After the SEC's trading suspension, the Lines brothers "ordered LOM staff to backdate and falsify internal records to create the false impression that the Sedona stock was owned by the nominees", alleged the SEC.

In its press release, LOM denied any wrongdoing.

"The SEC's allegations relate to LOM's bona fide efforts to arrange financing for the acquisition and operation of several mining properties in Canada and Central America in February 2003," said Mr. Moseley. "Today's charges reflect the SEC's fundamental misunderstanding of the transactions at issue. After the SEC suspended trading of Sedona stock, these same mining assets were acquired by various Canadian public companies, which successfully operated them. The SEC's allegations relating to trading in SHEP Technologies likewise concern LOM's legitimate business dealings."

The financial services company claimed its primarily regulator, the Bermuda Monetary Authority, had thoroughly investigated the conduct described in the SEC's complaint, and concluded its investigation in 2005 on an entirely different basis, as a result of which LOM agreed to make managerial changes, improve its internal controls and enhance its compliance regime and management structure.

Mr. Moseley said: "LOM does not expect that the filing of these charges will have any bearing on our operations, our clients, or the viability of the firm. We are hopeful that this development marks the beginning of the conclusion of a matter that should have been concluded long ago."

LOM said it will prove the SEC's charges are not only legally and factually unsound, but also part of a long-standing pattern of harassment against LOM and its officers, while showing the SEC has acted inappropriately by failing to correct a "number of materially false statements" made in court filings, despite being provided with evidence to the contrary by LOM.

"It is unthinkable that the SEC would ever treat a US-based broker-dealer the way that it has treated LOM," continued Mr. Molesey. "The SEC has targeted LOM despite our efforts to uphold the highest standards of responsible corporate citizenship and compliance. LOM welcomes the opportunity to clear its name and to defend itself against the SEC's unmeritorious claims."

The SEC is seeking permanent injunctions against future violations of the federal securities laws by the defendants, as well as disgorgement of "illegal proceeds" and civil penalties. The SEC is also seeking permanent penny stock bars against Scott Lines, Brian Lines, the LOM entities, Anthony Wile, Wayne Wile, Chapman, Peever, and Curtis, and seeks a permanent officer-and-director bar against Anthony Wile.

On the same day as its complaint against LOM was filed, the SEC brought three separate but related complaints, one at the US District Court for the District of Columbia against Sedona Software Solutions Inc., a Nevada corporation-based in Vancouver, British Columbia, and its former Chairman and CEO, John Cooper, 68, a Canadian citizen residing in Vancouver, British Columbia; another at the US District Court for the Southern District of New York against Ian Park, 60, a Canadian citizen residing in Toronto, Ontario and a former CEO, president and director of Renaissance Mining Corporation; and a third action at the same court against Lawrence Isen, 54, a financial newsletter writer residing in San Diego, California.

These three cases were filed as "settled", stated the SEC, adding that, as part of their respective settlement agreements, Sedona and Mr. Cooper have consented to injunctions prohibiting them from future violations of the Securities Exchange Act, Mr. Park has agreed to pay a $30,000 civil penalty and be barred from serving as an officer or director of a public company for five years, and Isen has consented to pay disgorgement of $133,595 and a $40,000 civil penalty. In settling the actions, none of the defendants admitted or denied any wrongdoing.