Former Lines Overseas Management president Brian Lines has been named as a defendant in a disclosure hearing before Puisne Judge Geoffrey Bell at the Bermuda Supreme Court tomorrow.

The in-chambers hearing relates to documents and telephone records that the US Securities and Exchange Commission wants from LOM and its managing director Scott Lines in relation to probes of alleged market manipulation involving Sedona Software Solutions Inc. and SHEP Technologies Inc.

LOM and the Lines family deny any wrongdoing in the alleged frauds.

In a summons naming Brian Lines as defendant, plaintiffs Lines Overseas Management Ltd. and LOM Securities (Bermuda) Ltd. asked the Supreme Court to hear their application to disclose items falling within the breadth of SEC subpoenas served on Scott Lines and LOM two years ago.

These include recordings of telephone conversations between Brian Lines/Scott Lines and customers and clients as well as documents containing confidential information of third parties including recordings of interviews with LOM personnel which the Bermuda Monetary Authority made as part of its own Sedona investigation.

Throughout their dispute with the SEC, LOM and Scott Lines have asserted that compliance with the subpoenas would violate Bermuda law. The SEC has led testimony from Bermuda lawyer Dennis Dwyer to dispute this claim, however LOM has asked Mr. Justice Bell to make a determination on whether they are legally allowed to disclose the information.

As such they have summoned former Scott Lines? brother, Brian to the hearing. He was president of LOM until last summer when he stepped down to ?improve the company?s ability to resolve the [SEC] matter and move forward?.

On January 6 this year, Brian Lines? lawyer informed LOM?s lawyers that his client ?does not consent? to the disclosure of recording of his telephone conversations.

Timothy Marshall of Marshall Diel Myers wrote lawyers at CD&P stating that ?as a party to such calls, (Brian Lines?) authorisation is required under Section 61 of the Telecommunications Act 1986 before disclosure can be lawfully given.?

Section 61 says the ?privacy of communications is inviolable?, wrote Mr. Marshall, adding that Section 9 of the Bermuda Constitution also ?echoes the importance of preventing disclosure of information given in confidence?.

He said that Mr. Lines was ?very concerned that LOM does not appear to be protecting the underlying privacy of such communications? which was Mr. Lines? expectation as well as the expectation of the parties to each telephone call.

He ?feels quite strongly? that the other parties would be very upset to learn that their communications, without their consent, have been given over to a foreign regulatory authority, Mr Marshall wrote.

Mr. Lines also suspects the recordings may contain privileged discussions he held with Mr. Marshall?s firm and a US firm, both retained in early 2003.

Mr. Marshall asked CD&P not to advance any procedural objection to Mr. Lines? intended request that any declaration in favour of disclosure be ?limited to communications in which our client is not a party and alternatively that there should be no disclosure of privileged communications?.

The hearing before Mr. Justice Bell comes on the heels of other legal developments involving the SEC subpoenas.

Two weeks ago, a US District Court Judge denied a motion by LOM and Scott Lines to stay a year-old court ruling ordering them to obey the four administrative subpoenas that the SEC served on Scott Lines in April, 2004.

Yesterday, LOM and Scott Lines moved for a partial reconsideration of that order on the grounds that while they ?intend to make reasonable efforts? to comply, they had to wait for the Bermuda Supreme Court to rule on whether compliance would not result in ?LOM running afoul of the law?.

LOM asked for the US District Court to extend the January 17 date for compliance by 30 days to allow adequate time for the Bermuda court proceedings and also allow LOM time to identify all documents and address issues of burden and relevance with the SEC.

LOM further asked the US District Court to stay the compliance order in the event that the Bermuda judge rules that compliance would force LOM to violate Bermuda law.

If however the US District Court does not grant relief, LOM asked that the court stay the order pending appeal before the D.C. Circuit.

The four subpoenas at issue mirror three subpoenas which the SEC asserts that it served on Donald Lines in November. Donald Lines, who took over as president of LOM when son Brian resigned, denies that he has ever been served by the SEC.

His son Scott and LOM have also filed a request for leave to respond to a SEC report filed with the District Court two weeks ago. LOM asserts the report was ?false and inaccurate in several material respects?. Besides detailing the three new subpoenas directed at Donald Lines, the SEC also asserted in its report that it had ?learned? that LOM may have destroyed records important to its investigation.

Mr. Lines and LOM deny any destruction of records and any wrongdoing. The SEC stands by its report.