Securities Lawyers Blog
The law offices of Gana Weinstein LLP have filed complaints before The Financial Industry Regulatory Authority (FINRA) on behalf of multiple clients against brokerage firm Comprehensive Asset Management and Servicing, Inc. (CAMAS) concerning Tamara Steele’s (Steele) recommendation to invest in Behavior Recognition Systems (BRS) (n/k/a Giant Gray, Inc.). The Claimants alleged Steele was registered with CAMAS and that CAMAS failed to supervise Ms. Steele’s sales of BRS or conduct due diligence and that BRS turned out to be a vesicle for investment fraud. BRS raised tens of millions from investors while its owner, Ray Davis (Davis), allegedly misappropriated a sizable portion of investor funds. The complaints allege that Steele solicited her clients to investment millions in BRS.
On September 14, 2018, the Securities and Exchange Commission (SEC) filed a complaint alleging that Steele sold approximately $13 million of BRS to more than 120 advisory clients without disclosing that Steele and her firm, Steele Financial, Inc. received commissions of up to 18 percent from the sales.
BRS was a software development company based in Houston, Texas that focused on technology that could analyze video content by imitating learning and memory processes of the human brain. BRS was founded in 2005 by Davis and he served as BRS’ Chairman of the Board until September 2015 and CEO until August 2014. In or around 2013 BRS’ revenues plummeted and its net operating losses increased substantially. By 2014 BRS’ total sales were only $765,000 and the firm suffered a net loss of $37.7 million.
In early 2016, the interest payments to investors stopped. On March 1, 2016, BRS sent a letter to its note holders that it intended on paying all interest payments due to date on April 1, 2016. During March 2016, BRS rebranded itself as Giant Gray as part of its restructuring efforts. However, Claimants never received the promised payments. Thereafter, in April 2018 Giant Grey declared Bankruptcy.
In December 2017 the SEC charged Davis with fraudulently raising approximately $28 million from investors and then diverting more than $7.8 million of those proceeds his personal benefit. According to the SEC’s complaint, BRS and Davis secretly diverted millions of dollars for Davis’s personal use by using fake invoices in the names of shell companies Davis controlled.
Our clients allege that CAMAS failed to supervise Steele’s sales of BRS as required under the industry’s rules. CAMAS was required to supervise the sale of BRS for suitability and record the transactions on the firm’s books and records. Claimants alleged that CAMAS knew or should have known that Steele engaged in BRS sales because the firm was obligated to supervise securities transactions and activities conducted by Steele through Steele Financial Inc. or in any capacity. Claimants allege that had CAMAS reviewed Steele’s files, communications, and client fund transfers the firm would have discovered evidence of her involvement in BRS recommendation of BRS investments to numerous clients.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.