A jury trial in a fraud action by the US Securities and Exchange Commission (SEC) against Bermuda-based financial services group Lines Overseas Management could take place as early as next month in Manhattan.

In a scheduling order issued on December 30, US District Judge Denise Cote, sitting at the US District Court for the Southern District of New York, placed the case on the "February 15, 2010 trial ready calendar" and informed all parties that: "You must be ready to proceed on 24 hours notice".

Defendants are LOM (Holdings) Ltd., Lines Overseas Management Ltd., LOM Capital Ltd., and LOM Securities (Bermuda) Ltd., which are all domiciled in Bermuda; LOM Securities (Bahamas) Ltd., which is domiciled in the Bahamas; LOM Securities (Cayman) Ltd., domiciled in the Cayman Islands; Scott Lines, a Bermuda resident who is LOM's president; his brother, Brian Lines, LOM's former president; Anthony Wile, a Canadian citizen who was a client of the LOM group; Wayne Wew, formerly known as Wayne Wile, a Canadian citizen and uncle of Anthony Wile who was also a client of the LOM group, currently believed to be residing in Switzerland; and Robert Chapman, a newsletter writer believed to be a current resident of Mexico and a former resident of Boca Raton, Florida.

The SEC has accused the defendants of receiving "illegal proceeds" of at least $5.8 million by manipulating the stock of two publicly-listed "shell" companies, SHEP Technologies Inc., a Canadian corporation based in Vancouver, and Sedona Software Solutions Inc., a Nevada corporation based in Vancouver, from 2002 to mid-2003. The LOM parties have denied the allegations.

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 Wew, and Chapman and a permanent officer-and-director bar against Anthony Wile. Two other defendants, William Todd Peever and Phillip James Curtis, settled with the SEC in August, 2008.

While neither admitting nor denying the allegations against them, they both agreed to be permanently barred "from participating in any offering of penny stock", an order of disgorgement of ill-gotten gains and a civil penalty to be determined at a later date, and to be deposed by the SEC for the investigation into the remaining defendants. It was specifically stated in their agreements that the settlement only covered the SEC's civil action and not any potential criminal action.

An LOM spokesman said that the "trial ready" order was a "routine procedural step" in the ongoing litigation, which continued on the schedule set by the court more than one-and-a-half years ago.

They said that consistent with that schedule, the discovery period concluded on December 18, 2009, with LOM participating actively in the process, and being fully supportive of the court's directives that there would be no extension of that deadline.

"The Court's December 30 order does not indicate that trial will occur in mid-February," they said. "Rather, court's "trial ready" calendar expressly stated that the case would be included on the February 15, 2010 calendar only 'if no motion' for summary judgment was filed by either side.

"Such a motion would, if granted, dispense with the need for trial on all or some of the issues in the case. The clerk of the court has further clarified that the case will be removed from 'trial ready' status if either party files a motion for summary judgment on January 25, as expected. The existing schedule provides that briefing on any summary judgment motions will be completed by February 22, 2010. If the matter does proceed to trial, the trial date will not be set until after the judge rules on any summary judgment motions.

"LOM is pleased with the progress of the litigation thus far, and it is very happy that the trial date is nearing and that we can finally have our day in court. LOM is optimistic that the evidence will prove the SEC's charges to be legally and factually incorrect."