Ontario’s securities regulator barred a Toronto-based hedge fund from trading after its lead manager died and dealers were hit with large losses on the firm’s trades.
The Ontario Securities Commission issued the temporary order as it investigates the financial condition of Traynor Ridge Capital Inc. and a series of failed trades that saddled three brokerage firms with losses, the regulator said in an Oct. 30 filing. The firms were left with losses ranging from C$85 million to C$95 million ($61.3 million to $68.5 million) after completing trades for Traynor during the week of Oct. 23.
Christopher Callahan, the fund’s chief compliance officer and its ultimate designated person, was reported dead Oct. 28, the OSC said.
Traynor’s website describes Callahan as the firm’s founder and lead portfolio manager. His LinkedIn profile says he had worked there for nearly four years following stints at other firms since he graduated from Queen’s University in 2014.
“It appears to the Commission that Traynor is in serious financial difficulty,” the regulator said in its filing. “Further investigation of these events is required.”
CIBC World Markets Inc., Traynor’s prime broker, terminated its prime brokerage service agreement with the fund because it became unresponsive, OSC said in the filing. Representatives for Traynor and CIBC didn’t immediately respond to requests for comment.
The TR1 Fund, one of three investment vehicles operated by Traynor, uses what it called an event-driven, market neutral strategy that aims to capitalize on market inefficiencies in publicly-traded securities.
Callahan had been at Traynor since January 2020 after working for another Toronto-based firm — HGC Investment Management Inc. — for less than four years, according to his LinkedIn profile.
HGC President Brett Lindros said he had not seen much of Callahan in recent years and knew little about the investment strategy he used at Traynor. He said Callahan spent much of his time at HGC working as an analyst.
“I liked Chris a lot. He was a good guy,” he said. “It’s very sad news.”
--With assistance from Derek Decloet.
(Adds comment from former colleague in final paragraph.)