The mystery submachine gun I blogged a few weeks ago was correctly identified by a commenter named “Mr Clark”. The gun was a prototype developed by Taurus and based on the S&W Model 76. Back in the 1970s the Bangor Punta Corporation, a publicly listed American conglomerate, owned Smith & Wesson along with the majority share of Taurus. Having a shared parent allowed Taurus to import expertise and designs from the S&W.
During the early 1970s Taurus entered their version of the S&W M76 into a competition to be selected as the next Brazilian military submachine gun. They lost out to the Beretta M12. Beretta manufactured the M12 in Brazil until 1980 when they sold their factory, along with manufacturing rights for a number of firearms designs, to Taurus who continued to produce the M12 under license.
Ronaldo Olive kindly send us some more photos of the ill-fated SMG: