Lines Overseas Management is suing the Bermuda Monetary Authority to try to stop new regulations forcing it to hand over details about private clients to overseas regulators.

Donald Lines, chairman of LOM, said that the laws would have wide-ranging effects on Bermuda?s wealth management industry and it could be badly affected if the BMA is allowed to get its hands on details about private clients and then pass them on to foreign regulators.

?It is a total violation of the privacy of private clients,? he said. ?There is no sign that these people are doing anything wrong.?

And Mr. Lines predicted that Bermuda?s profitable trust industry will up and leave if lawmakers go ahead with proposed wide-ranging new legislation that will allow the BMA to demand similar information about trusts.

?This is a matter of principle,? said Mr. Lines about the writ, which was filed on December 30, by LOM, which is a financial institution, and its subsidiary Lines Asset Management. ?And it affects all business in Bermuda ? not just LOM.?

Munro Sutherland, the BMA?s superintendent of banking, trusts and investment, said that the BMA had yet to be served with the action, but was aware of the dispute. He said the BMA was not in a position to comment on the case but confirmed it was to do with two clauses, 30B and 31 (1C) in the Bermuda Monetary Authority Act.

LOM now hopes that the Supreme Court will make a binding decision about how far the BMA can go under new additions to the regulations that gives it the power to demand documentation be handed over.

The disputed law is a new clause, 30B, of the Bermuda Monetary Authority Act, which gives the BMA compulsory powers to make entities with a licence provide them with information that can be passed on to foreign regulators.

LOM said this conflicts with a standard confidentiality clause already in the act under section 31 (1C), and wants the courts to decide if the BMA has the right to ask them to hand over documents.

?LOM has initiated proceedings in the Supreme Court of Bermuda with the purpose of asking the court to clarify the meaning of certain sections of the Bermuda Monetary Authority Act 1969,? said Mr. Lines.

?LOM and its senior legal counsel in London have interpreted these points of law differently than the Bermuda Monetary Authority, and thus will leave it for the court to make the final determination. The issue in question relates to sections 31(1C) and 30B of the Act, and concerns the ability of the BMA to disclose confidential information relating to the customers of Bermuda financial institutions to parties outside of Bermuda.?

Mr. Lines said it was important for the industry that LOM file the legal action in a bid to find out whether the regulator has the legal right to force them and other financial institution to hand over what it considered to be confidential information about clients ? and then pass it on to regulators overseas.

He said: ?The information they have asked for is not being provided for the regulator, but is customer information they will then send to people from abroad.?

Mr. Lines said that in one case they had been asked for information on owners of a certain share going back two years which included copies of every statement. ?This is just ridiculous,? he said. ?I think in terms of private client?s privacy it would kill it (the business).?

He added that if the same laws were to apply to trusts, it would have a negative impact on this sector as well.

?It is hard to imagine there will be any trust business left in Bermuda.?