A US Court has denied a motion by Lines Overseas Management and its managing director Scott Lines to stay a court order directing their compliance with four administrative investigative subpoenas issued by the US Securities and Exchange Commission.

In denying the motion last Friday, US District Judge Richard W. Roberts gave LOM and Mr. Lines until January 17 to follow a year-old order by US District Court Magistrate Judge Alan Kay to produce documents in compliance with four administrative investigative subpoenas.

The subpoenas served on Mr. Lines in the Miami International Airport on April 2004 relate to SEC investigations of alleged securities fraud involving Sedona Software Solutions Inc., SHEP Technologies Inc and HiEnergy Technologies Inc.

LOM and the Lines family deny any wrongdoing in the probes and asked Judge Roberts to stay the Magistrate Judge?s order pending a decision on their request for a review of the order.

However Judge Roberts said that LOM and Lines failed to carry their burden of persuasion on the four factors considered in determining whether a stay is warranted.

?They do not show irreparable harm that is certain and great. They do not demonstrate that they are likely to succeed on the merits of their position, even under a standard of review that is favourable to them. They do not show that the balance of hardships tips in favour of granting the stay. They do not demonstrate that the public interest would be served by the stay,? he wrote in his ruling.

LOM and Lines had argued that complying with the subpoenas to produce certain documents and to submit to deposition before the SEC would cause irreparable harm because it would subject them to civil and criminal suits for violation of foreign confidentiality laws.

However Judge Roberts said that they failed to establish that they would suffer ?an imminent injury that is both great and certain, and that legal remedies cannot repair?. They also failed to establish a ?genuine conflict with foreign laws?.

LOM and Lines ?make no demonstration of the realistic probability of the feared litigation,? Judge Roberts wrote adding that since the subpoenas were first issued, they could have taken measures to protect against possible litigation by seeking permission to comply or waivers of confidentiality from either its clients or foreign courts.

?[One who relies on foreign law assumes the burden of showing that such law prevents compliance with the court?s order,? the ruling noted.

Judge Roberts added that LOM and Lines did not offer any citation to ?any allegedly conflicting foreign law, let alone any discussion of how the law poses a conflict.?

The Bermuda parties had also asserted a substantial likelihood that they will prevail on the merits on review, however Judge Roberts noted that the primary issue in the dispute over the enforceability of the subpoenas focused on personal jurisdiction. Although Lines is a Bermudian citizen and resident and LOM is a Bermuda financial services corporation with no offices in the United States, Judge Roberts said that their assertion that the court had no personal jurisdiction on them fails in the face of the statute and case law.

?The magistrate judge examined facts submitted in several affidavits filed by the SEC, Lines and LOM, heard oral argument on the issues and facts, and ultimately determined that LOM had sufficient systematic and continuous contacts with the United States that related directly to the subject of the subpoenas at issue,? Judge Roberts wrote.

He continued: ?The SEC also established that Lines, managing director of LOM, personally managed or oversaw some of the trades the SEC seeks to investigate through the subpoena, leading the magistrate judge to conclude that Lines also had sufficient contacts with the United States to support personal jurisdiction.?

The fact that Mr. Lines was personally served within the jurisdiction prescribed may be sufficient to establish personal jurisdiction, he added.

Additional errors asserted by LOM and Mr. Lines are ?trivial or unsupported by law?, Judge Roberts said pointing to the example of their complaint that the Magistrate Judge erred when he did not grant them an evidentiary hearing on the personal jurisdiction issue.

?They cite nothing to establish that they were entitled to an evidentiary hearing. The decision to grant an evidentiary hearing is committed to the sound discretion of the Magistrate Judge,? Judge Roberts wrote.

The judge added that while the public has an interest in prohibiting the courts of the United States from over-reaching their jurisdiction, it also has an interest in the enforcement of the securities laws, and in the investigations supporting those laws. In this case, LOM and Lines ?already obtained a reasoned decision from a competent court of the United States that was conscientious about protecting against jurisdictional overreaching,? he said.

?No fault in the magistrate judge?s reasoning is readily apparent, and the public interest factor in this case weighs in favour of denying the stay,? he said.

A LOM spokesperson said yesterday: ?A decision on how to proceed will be made after LOM and Scott Lines have each had an opportunity to review the ruling and consult with their respective US counsels.?