The Securities and Exchange Commission today announced that, on August 17, 2004, Magistrate Judge Alan Kay of the U.S. District Court for the District of Columbia ordered Lines Overseas Management, Ltd. ("LOM"), a Bermuda-based holding company with broker-dealer subsidiaries, and its Managing Director, Scott Lines, to demonstrate why they should not be ordered to comply with four subpoenas lawfully issued and validly served by the Commission in connection with two separate investigations. LOM and Lines, a Bermuda resident, refused to appear for testimony and produce documents as directed by the four subpoenas. On June 10, 2004, the Commission filed the above-mentioned subpoena enforcement action seeking a court order requiring LOM and Lines to comply with the subpoenas.

The Commission issued the subpoenas in connection with two separate investigations into possible fraud, market manipulation, and reporting violations in the securities of three U.S. public companies: Hienergy Technologies, Inc. ("Hienergy"), Sedona Software Solutions, Inc. ("Sedona"), and SHEP Technologies, Inc. ("SHEP"). The Commission's investigations have revealed that certain individuals engaged in extensive trading in the securities of Hienergy, Sedona, and SHEP through accounts at LOM in Bermuda, the Bahamas, and the Cayman Islands.

The Commission has alleged that the subpoenaed documents and testimony are relevant to matters under investigation and are within the scope of the Commission's investigative authority. The Commission has requested that the Court order LOM and Lines to comply fully with the terms of the subpoenas by producing documents and appearing for testimony.