Receiver seeks help with failed hedge funds

The court-appointed receiver to collapsed hedge fund firm Traynor Ridge Capital Inc. is looking for an investment advisor to help wind down its funds.

Earlier this month, the Ontario Securities Commission (OSC) imposed a cease-trade order on the firm and its various funds, amid concerns that there was no one in control of the operation after Traynor Ridge’s head, chief compliance officer and ultimate designated person, Christopher Callahan, died.

At the same time, the OSC also petitioned the Ontario Superior Court of Justice to place Traynor Ridge into receivership.

The court appointed Ernst & Young Inc. (E&Y) as the receiver and manager of Traynor Ridge, its funds and assets.

Now, E&Y is seeking investment advisors to help with the “orderly liquidation” of the funds’ securities, including bonds, public and private equities, and warrants.

The task includes developing an overall strategy for liquidating the securities, valuing the securities, advising on transactions and executing the sales process.

The deadline for interested firms to submit proposals is Nov. 30 at 5 p.m.

On Nov. 14, Ontario’s Capital Markets Tribunal extended the cease-trade order against the firm and its funds to Feb. 8, 2024, with an exception for E&Y and its agents to carry out the liquidation.

No enforcement allegations have made in the case, although regulators have raised concerns about possible trading misconduct at the firm. The Canadian Investment Regulatory Organization estimated that several dealers have suffered between $85 million and $95 million of losses from their dealings with Traynor.

At least one of those dealers, Virtu Canada Corp., has sued Traynor, seeking damages for the losses it allegedly suffered from failed trades.