U.S. SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 19030 / January 10, 2005

SECURITIES AND EXCHANGE COMMISSION V. LINES OVERSEAS MANAGEMENT, LTD., AND SCOTT LINES, Misc. Action No. 1:04 MC 302 (D.D.C.)

LINES OVERSEAS MANAGEMENT, LTD. AND ITS MANAGING DIRECTOR, SCOTT LINES, ORDERED TO COMPLY WITH SEC SUBPOENAS

The Securities and Exchange Commission today announced that, on January 7, 2005, Magistrate Judge Alan Kay of the U.S. District Court for the District of Columbia ordered Lines Overseas Management, Ltd. ("LOM"), a Bermuda-based financial services firm, and its Managing Director, Scott Lines, to comply with four subpoenas issued and served on Scott Lines by the Commission in connection with two separate investigations. LOM and Lines, a Bermuda resident, had refused to produce documents and appear for testimony 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 had 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: Sedona Software Solutions, Inc. ("Sedona"), SHEP Technologies, Inc. ("SHEP"), and Hienergy Technologies, Inc. ("Hienergy"). 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 alleged that the subpoenaed documents and testimony were relevant to matters under investigation and were within the scope of the Commission's investigative authority. The subpoenas were served on Scott Lines on April 20, 2004 while he was in the United States.

The Court ordered LOM and Lines to comply with the document subpoenas by no later than February 14, 2005. Lines was ordered to appear for testimony in Washington, D.C. within 20 days of the Commission's receipt of the document production. The Court found that it possessed personal jurisdiction over LOM and Lines, and rejected LOM's contention that the confidentiality laws of Bermuda, the Bahamas, and the Cayman Islands precluded the firm from complying with the Commission's subpoenas.