Responding to BRS Labs DemandsBy: Carlton Purvis, Published on Jun 20, 2013
Earlier this month, we read a BRS Labs document detailing the company’s historical performance and future plans. On June 10th, we reached out to BRS Labs' media contacts to discuss the information and gather feedback. Instead, BRS Labs' CEO Ray Davis called us demanding to know who showed us the documents.
In a follow-up conversation with John Honovich, Davis explained how his business associate conducted an investigation into John's personal life, contacting classmates, roommates, friends and landlords from 15 to 20 years ago.
Later that day we received a cease and desist letter by email.
The letter demands IPVM return any copies of the document to BRS Labs and not report on this, warning that:
"[BRS Labs] is prepared to pursue any and all applicable civil and criminal penalties and other legal remedies available in this matter to the fullest extent permitted by applicable law, and to seek not only injunctive relief, but also actual, statutory and punitive damages, as well as attorneys' fees."
Indeed, the company emphasized that:
"Disclosure by you of the information in the confidential Memorandum or simply the fact that the offering is ongoing could jeopardize the Company's ability to claim a securities law exemption from registration for the offering, which could cause significant damages to the Company, which it would not hesitate to seek remedies for from you."
However, BRS Labs issued a press release recently trumpeting their opening of a preferred funding round, so the offering is public knowledge as is the $85+ million the company has already raised.
That said, perhaps this letter is BRS Labs attempt to demonstrate to the SEC/regulators that they tried to stop further disclosure.
When Davis called me, he said the documents were serialized with a hidden code on the page. With a copy of the documents, he says he would be able to find out who leaked them. At IPVM, we protect our sources and fortunately so does the law.
US law typically protects the media from revealing sources. Shield Laws in several states, including Texas and Hawaii protect “journalists from disclosure of confidential sources or information that could lead to identification of the source.” These laws also protect “information gathered by journalists that has not been published or broadcast, whether it is confidential or not.” We reviewed this with the Reporter’s Committee for Freedom of the Press.
We want to give BRS Labs a fair chance to comment. We have reached out to BRS Labs again for feedback, however, we have received no further response. Our post on their financials and future is now released.
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