In a press release, the U.S. Attorney's Office in Manhattan said Dennis Michael Nouri, the Durham, N.C., company's president and CEO, and his brother Reeza Eric Nouri, a Smart Online employee, have been charged with securities fraud and conspiracy.

Four brokers -- Ruben Serrano, Anthony Martin, James Doolan and Alain Lustig -- also have been charged with conspiracy and securities fraud in the matter, prosecutors said.

Martin and Doolan both worked until 2006 as brokers at Maxim Group LLC, a New York broker-dealer. Serrano has worked at Maxim since 2003. Lustig has worked since 2003 at Jesup & Lamont Securities Corp., a New York broker-dealer.

They each face a maximum of 20 years in prison on the securities fraud charge.

The Securities and Exchange Commission also brought civil charges against the men Tuesday.

The Nouris were expected to appear before a federal magistrate judge in Durham on Tuesday, while the brokers were expected to appear before a federal magistrate judge in New York.

Lawyers for the men couldn't immediately be located for comment Tuesday.

Smart Online's stock is traded on the over-the-counter bulletin board. It lost 76 percent of its value Tuesday, ending at 68 cents.

In a press release, the company said it expected to name an acting CEO and President later Tuesday, and did not believe its ongoing operations should be affected by the charges against Michael Nouri.

The company said the SEC has named it in a civil action requesting a bar against future securities law violations, but no fines.

Prosecutors have alleged that the Nouris, between May 2005 and July 2007, paid brokers to solicit their customers to buy the company's shares in order to drive up the stock price.

Michael Nouri allegedly told an unnamed cooperating witness during a recorded telephone conversation in February 2006 what to say when questioned by investigators about trading in Smart Online's stock, according to a criminal complaint.

Nouri allegedly told the witness to tell investigators that the witness "did not pump and dump the stock" and that the witness did not pay money to brokers and neither did Nouri, according to the criminal complaint.

According to the SEC complaint, Nouri, between May 2005 and January 2006, paid at least $170,000 in bribes to three individuals, including Serrano, to create volume in Smart Online's stock. Some of that money was paid by an unnamed individual to Martin, Lustig and Doolan, the SEC said.

During that period, six individuals, including the four brokers, solicited purchases of at least 267,000 Smart Online shares, or about 10 percent of the company's trading volume at the time, from investors without disclosing the payments, the SEC alleged.