Virtu Canada Corp is suing troubled Toronto-based hedge fund firm Traynor Ridge Capital Inc over at least CAD5m in losses it says it incurred executing trades asked it to execute but then failed pay for, according to a report by The Globe and Mail.

Traynor was was placed under a cease trade order by the Ontario Securities Commission on Monday over the failed trades which happened following the death of founder and sole director Christopher Callahan.

The lawsuit filed by Virtu, a trading firm that executes orders on behalf of investment management clients, alleges that it placed 26 buy orders for Traynor in September and October, but never received the required money before the trades settled a few days later. Virtu then started selling the positions but realised loeses "in excess of CAD5million” due market movement.

The law suit also says that Virtu expects to incur further losses as other positions are unwound.