The subsidiary, Pan-Alberta, which sold natural gas into the US, had a limited hedging programme to protect itself from currency fluctuations.
But, the Financial Times reports, the lawsuit alleges that in late 1996 and 1997 the rogue trader embarked upon a reckless and speculative foreign exchange trading spree, incurring losses of US$49m.
The trader was suspended in 1998 after the company discovered the losses.
TransCanada said it would have been able to limit the losses had E&Y alerted it to the heightened foreign exchange activity.
The accountancy firm said it would defend itself rigourously and that the work was carried out in accordance with professional standards.
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Deloitte's north-west Europe foray; BDO, Smith & Williamson investment paths; Shelley Stock Hutter; and Wilkins Kennedy discussed by editor Kevin Reed on our Friday Afternoon Live broadcast
Accountants should alter their perspective on auto-enrolment to maximise business opportunities, according to Eric Clapton.
Kevin Reed discusses whether new accountancy group Cogital can rival the Big Four...and its likely direction of travel