The directors of AremisSoft, a major US software company that entered chapter 11 in March 2002, are accused of running bogus software deals valued at hundreds of millions of dollars.
The case is the largest action of its kind in terms of quantum the US has sought to undertake. The SEC is seeking to enforce an earlier confiscation order in the Isle of Man, which ruled that money held in accounts on the island are the proceeds of a fraud committed by AremisSoft directors against investors.
In an exceptional move for such a small jurisdiction, the English counsel acting for the SEC and the US Attorney-General are set to appeal the decision by the Isle of Man court permitting the release of funds to AremisSoft.
The funds will enable it to finance the lawyers needed for an appeal of the earlier US ruling.
The action is being brought in the Isle of Man because around half of AremisSoft's funds are held in bank accounts on the island. The accounts were set up by Swiss and French nationals.
The action is being fought by a team of heavyweight English counsel: David Farrer QC, the head of 7 Bedford Row, is acting for the US Attorney-General for the Southern District of New York; Murray Rosen QC, head of 11 Stone Buildings, for the SEC; John Mowbray QC, joint head of New Square Chambers, for the trustees; and Alun Jones QC of 3 Raymond Buildings for the trust beneficiaries.
If AramisSoft's directors defeat the SEC's appeal then the case will return to the US, where it is estimated that it will take another year to complete.
A civil class action has also been brought in the Isle of Man against the company's directors.