Lines Overseas Management has produced ?electronic copies of some of the very tapes that the US Securities and Exchange Commission accused it of destroying?, LOM said this week in notice filed with the US District Court for the District of Columbia.

The notice relates to the Bermuda-based investment firm?s continuing legal battle with the SEC over the enforcement of subpoenas served on LOM managing director Scott Lines 22 months ago and associated with SEC probes into alleged securities fraud involving bulletin board listed SHEP Technologies Inc., HiEnergy Technologies Inc. and Sedona Software Solutions Inc. While the SEC has withdrawn its application to enforce the subpoenas related to HiEnergy on the grounds that it no longer needed information from LOM ?based on recent developments unrelated to this action?, late last year it filed a Status Report with the US District Court in which it asserted that LOM ?may? have destroyed tape recordings requested under subpoena as part of its investigation into alleged market manipulation of the security Sedona.

In the notice filed yesterday, LOM said it has now produced ?electronic copies of some of the very tapes the SEC accused LOM of destroying, removing any doubt as to the falsity of the SEC?s charges.?

LOM maintains that charge as well as others in the SEC report ? that president of LOM, Donald Lines of ?flouted? subpoenas and that LOM demanded a confidentiality agreement on a settlement with the Bermuda Monetary Authority ? are ?absolutely and demonstrably false?.

It again asked the US District Court to strike the entire SEC report, on the grounds that ?a failure to resolve these issues will cause serious damage to the reputations of respondents in Bermuda, infect all future proceedings in this case and raise serious issues on appeal.?

LOM?s statement that it has produced the tapes is just one of several developments occurring in recent days.

Last Friday, the US Court of Appeals affirmed a US District Court Judge?s order denying LOM?s motion for a stay of a Magistrate Judge?s compliance order pending a review. The affirmation means that LOM and Mr. Lines must now produce documents responsive to the SEC subpoenas, however yesterday LOM said in its court filing that it would comply subject to a number of qualifications.

Last month, the firm sought and received a declaration from the Bermuda Supreme Court enabling LOM to to release telephone recordings of conversations and LOM customer documents. That court however granted former LOM president Brian Lines an injunction restraining LOM from disclosing details of his telephone conversations involving personal or legally privileged conversations or transcripts of interviews which he gave to the Bermuda Monetary Authority during its parallel investigation of the Sedona transaction

On February 6, the Bermuda Supreme Court took the additional step of staying enforcement of certain aspect of its original order pending appeal of its declaration by Brian Lines.

LOM said yesterday that the Bermuda Supreme Court appeal will likely take place in late March.

?Because LOM is under an order of a competent court in its home jurisdiction not to produce these documents to the SEC, it is unable at this time to comply with this limited aspect of the SEC?s subpoena,? LOM said in its filing.

It continued: ?Unless the Bermuda injunction is lifted, settled principles of international comity requiring ?that domestic courts not take action that may cause the violation of another nation?s laws? continue to preclude enforcement of the SEC?s subpoena insofar as it seeks these documents.?

As another qualification to complying with the SEC subpoenas, LOM told the US District Court that it reserved its right to continue to press its objections to the magistrate judge?s order for compliance. A decision on this matter is pending before the US District Court.

Since the Court of Appeals did not decide whether the District Court was obligated to conduct a de novo review of the magistrate judge?s order, LOM has asked the District Court to proceed in its consideration of the proper standard of review applicable to the order and to apply that standard in light of LOM?s objections at the earliest possible opportunity.

?Now that LOM has begun producing documents to the SEC, prompt adjudication of [LOM?s objections to Magistrate Judge Kay?s order is all the more urgent so that LOM is not denied its statutory right to de novo review by an Article III judge, and so that the harm to LOM will be minimised if the magistrate judge?s order is found to have been in error,? the LOM document said.