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U.S. Securities and Exchange Commission


Litigation Release No. 20325 / October 9, 2007

SEC v. Smart Online, Inc., et al., Civil Action No. 07-CV-07960 (PKC) (S.D.N.Y.)

Court Permanently Enjoins Smart Online, Inc. in Broker-Bribery Scheme

On October 2, 2007, the United States District Court for the Southern District of New York entered a consent judgment against defendant Smart Online, Inc. ("Smart Online") in an action filed last month by the Securities and Exchange Commission. Without admitting or denying the allegations of the Commission's complaint, Smart Online consented to the entry of a judgment by the Honorable P. Kevin Castel permanently enjoining Smart Online from further violations of the antifraud provisions of the federal securities laws, specifically Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and Section 17(a) of the Securities Act of 1933.

The Commission's complaint alleged that between May 2005 and January 2006, Smart Online's CEO, Michael Nouri, paid over $170,000 to stock brokers, including defendants Anthony Martin, James Doolan, Ruben Serrano, and Alain Lustig, to solicit customers to purchase Smart Online stock in order to qualify the company for listing on the NASDAQ by increasing the number of shareholders and trading volume of Smart Online stock. The complaint further alleged that Michael Nouri concealed the bribes as "consulting fees" paid pursuant to sham consulting agreements.

The litigation is continuing against the remaining defendants.

For further information, see Litigation Release No. 20276 (Sept. 12, 2007).



Modified: 10/09/2007