OSC halts Toronto hedge fund's trades, launches probe after losses and manager's death

financialpost.com:

The sudden death of a Toronto-based hedge fund manager has prompted an investigation by Ontario’s securities regulator into tens of millions of dollars in losses that the fund appears to have run up.

The Ontario Securities Commission (OSC) issued a temporary order to halt trading 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 $85 million to $95 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