Ontario hedge fund embroiled in chaos after manager’s death placed in receivership
An Ontario court placed Traynor Ridge Capital Inc. into receivership as regulators outlined the chaotic series of events that unfolded after the unexpected death of the hedge fund’s founder, Chris Callahan.
Ernst & Young has been named as the receiver and manager of all of Traynor’s assets, according to the Ontario Securities Commission. The Ontario Superior Court of Justice in Toronto heard the OSC’s request to appoint a receiver on an urgent basis.
The OSC is investigating after series of trades last month left three brokerage firms with almost $100 million in potential losses, including Virtu Financial Inc., which filed a suit to recover its losses. Echelon Wealth Partners Inc. also has been caught having made trades for Traynor it couldn’t settle, Bloomberg has reported.
Friday’s court filings describe a three-man operation with $95 million in assets just a month ago that has no one left in charge, making it impossible to even update the fund’s website, according to a law firm. The filings also outline that Traynor has investment vehicles based in the Cayman Islands, where two independent directors say they too don’t have current knowledge of the funds’ assets.
“There is no question that it is in the best interests of the Traynor stakeholders to appoint a receiver. Simply put, there is no one in charge of the company right now,” Justice Barbara Conway said in the order.
Lawyers from Bay Street law firm McMillan LLP, which according to court documents has acted for Traynor since its inception, told the OSC on Oct. 28 that Callahan was dead. By Oct. 30, the regulator had issued a temporary cease-trade order.
That same day, the regulator had a call with William Chyz, Callahan’s right-hand man, who appeared to be
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