Former Bank of Bermuda president Donald Lines has been subpoenaed by the US securities regulator in relation to probes of alleged securities fraud involving the company he now heads that was founded by his two sons, according to court documents filed yesterday with a US District Court.

The US Securities and Exchange Commission said in documents filed with the US District Court for the District of Columbia that on November 10, 2005, SEC staff personally served three administrative subpoenas on LOM's chairman and president, Donald Lines, while he was present in the United States.

A spokesperson for Lines Overseas Management said yesterday however that while Mr. Lines, 73, travelled to the US in the second week of November 2005 for an emergency heart operation, "he was not then nor has he ever been served with an SEC subpoena, and is bewildered as to why and how the SEC would allege otherwise."

Last night however SEC assistant chief litigation counsel Michael K. Lowman responded that the SEC "stands by our statements in the report" which said that Mr. Lines was served with a personal subpoena as well as subpoenas issued to Lines Overseas Management Ltd. and LOM (Holdings) Ltd.

"We have the affidavit of the process server to prove it," Mr. Lowman said last night.

The subpoenas are said to mirror four previously served on LOM managing director Scott Lines and the corporate entity when he travelled to the US in 2004 for the purpose of seeing a heart doctor.

All subpoenas relate to requests for information relating to SEC probes of market manipulation involving shares issued by Sedona Software Solutions Inc. and SHEP Technologies Inc and HiEnergy Technologies Inc.

The SEC has previously told the court that evidence from its investigations has led its enforcement officers to LOM and Scott Lines as "potential key actors in the schemes."

The Lines brothers and LOM deny any wrongdoing.

The court filing said that the subpoenas served on Donald Lines required the production of documents as well as his in-person testimony at the SEC's Washington headquarters in mid-November. However the SEC said neither Donald Lines nor the two LOM entities complied with or responded in anyway to the subpoenas.

The senior Lines took over as president this summer after his son Brian, who co-founded the company in 1992 with brother Scott, resigned amid hopes that his departure "might improve the company's ability to resolve the matter and move forward."

Yesterday however in response to the SEC's filing, LOM told this newspaper that the Bermuda Monetary Authority ? which had launched in its own probe of LOM in relation to Sedona ? had "certain regulatory issues with the regulated LOM companies arising out of Sedona and related matters."

"Those issues have been resolved to the satisfaction of the BMA by LOM companies having made changes to their management and control arrangements and having given undertakings to the BMA to further enhance their compliance regime and their management structure," a spokesperson said.

This summer the brokerage subsidiaries of the LOM Group curtailed client activity in the US bulletin board and pink sheet over the counter markets due to regulatory scrutiny and earlier claimed to have spent US$2.75 million over the last two years on legal fees associated with the SEC probe.

SEC staff continue to evaluate what action may be appropriate if LOM president and chairman Donald Lines and the LOM entities continue to flout the November's subpoenas. However, the SEC said there is no other avenue to obtain the information it wants from LOM or Scott Lines other than by seeking enforcement of its original subpoenas through the US legal system.

The parties have been waiting since May for US District Court Judge Richard W. Roberts to rule on the legality of a Magistrate Judge's ruling last January in which he ordered LOM/Lines to comply with the original subpoenas.