US financial regulators are seeking details of the abandoned takeover deal between Marlborough International and E-Pawn.com, the US Internet company, that was brokered by former Taoiseach Albert Reynolds.

Trading in the shares of Florida-based E-Pawn.com have been suspended as part of one of the biggest ever investigations into securities fraud in the US.

Dublin-based Marlborough has severed all links with the US company which was introduced to them by the former Taoiseach. Among the allegations made by federal prosecutors is that the share price of E-Pawn.com was manipulated, which could have had a bearing on the proposed takeover by Marlborough. A spokesman for the Securities and Exchange Commission in New York said yesterday that it was aware of the proposed link-up with Marlborough and would be examining it.

The spokesman would not comment on whether the commission would want to speak to Mr Reynolds.

The spokesman stressed that Mr Reynolds was not a named party in any action being taken by the SEC.

Mr Reynolds was not available for comment yesterday. He told RTE radio yesterday that he was asked by a friend to take up the position with E-Pawn to advise on a strategy to expand into Europe. He said he was paid in "restricted shares" that cannot be cashed in until next year. Mr Reynolds described his role: "If they [E-Pawn] identify a company that they want to take a closer look at, they ask me to do a bit of research on it. And I advise them whether I think there is a fit there," he said. He added that the company had identified Marlborough, run by well-known Fianna Fail supporter Mr David McKenna, and asked him if he knew the company. "I spoke to Marlborough. I told them all I knew about this company, but it was a matter for themselves to go and do their own research," he said.

Mr Reynolds said he was not involved in the negotiations.

He described his position as "an adviser to the board of the company". In a press release issued by EPawn.com last month announcing a link up with Marlborough, Mr Reynolds was described as chairman of the company's advisory committee. The SEC said yesterday that advisory committees do not have any fiduciary responsibilities under US securities law.

Members of an advisory committee are not responsible for stock exchange filings or other corporate governance matters, he said. According to the indictment filed by federal prosecutors that was unsealed in the New York courts last Wednesday E-Pawn.com sought the assistance of an investment banking company called DMN Capital investments to defraud investors. The president of E-Pawn.com, Mr Eli Leibowitz and another executive, Mr Leslie Greyling, are accused of using 1 million shares of E-Pawn.com stock to bribe a broker to tout the company shares. The SEC has suspended trading in E-Pawn shares and Mr Leibowitz has resigned.

The move against E-Pawn was part of a multi-agency crackdown that involved more than 120 people and included members of the five main organised crime families in New York.

The FBI claims that organised crime syndicates recruited stockbrokers to inflate the value of companies in which they held secret ownership interests.

More than $50 million was conned from small investors, many of them elderly, according to the FBI. The investors poured money into companies that they were told produced software, ran amusement parks or manufactured roofing materials.

Many of the companies did not in fact exist or were shell operations.