Gana LLP Investigates David A. Noyes Sales of Behavioral Recognition Systems (a/k/a Giant Grey)

shutterstock_94632238-300x214The securities lawyers of Gana LLP are investigating investor losses in Behavioral Recognition Systems (BRS) – now known as Giant Grey.  Investors have contacted our firm concerning Scott Reed a former executive at brokerage firm David A. Noyes & Company (David Noyes) who recommended stock in BRS to dozens of clients raising millions of dollars for the company.  David Noyes also sold other private placements including Power Energy Systems, Farris Floral, Evotem, and Digonex Technologies to investors.

BRS marketed itself to investors as a company that makes artificial intelligence technology that analyzes video information. Ray Davis (Davis) founded Behavioral Recognition Systems in 2005 and ran the company until 2015.  Davis raised $47 million for BRS and in 2010 hired his son, Charles, to be an executive vice president.

According to a lawsuit BRS (Giant Gray) accused Davis of defrauding the company out of $15 million by setting up a series of companies to disguise transactions as legitimate services. Instead, the company claims that Davis invoiced millions of dollars for non-existent services and used the money to support his lavish lifestyle.

After the lawsuit Pepperwood purchased Davis’ stock and created Omni AI, a new entity that has taken control of Giant Gray’s intellectual property and assets which have been valued at less than $5 million. Investors in Giant Gray have not been offered Omni AI shares and instead are offered a 10 percent royalty as well as prospective proceeds from the pending lawsuit.  In all likelihood investors have suffered a complete loss.

Brokerage firms that sell private placements have obligations to conduct due diligence on the investment before recommending it to their clients.  The due diligence rule stems from FINRA Rule 2310 that states that a brokerage firm must have reasonable grounds to believe that a recommendation to purchase a security is suitable for the customer.  Brokerage firms are required to exercise a high degree of care in investigating and independently verifying an issuer’s representations and claims.  FINRA has stated that a brokerage firm has a “special relationship” with a customer from the fact that in recommending the security, the brokerage firm represents to the customer that a reasonable investigation has been made.

At Gana 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.