Corzine Done at MF Global; Hires Criminal Defense Attorney

The fall of Jon Corzine, once a "Master of the Universe" as co-Chairman of Goldman Sachs

, has been swift and particularly unceremonious. Mr. Corzine, who spent ten years in politics as a senator and governor of New Jersey after leaving GS with around $400 million, took the top job at futures brokerage MF Global

in March 2010. Corzine resigned on Friday. It was a short stint. In a statement, he said, “I feel great sadness for what has transpired at MF Global and the impact it has had on the firm's clients, employees and many others,” Mr. Corzine, 64, said in a statement. “I intend to continue to assist the company and its board in their efforts to respond to regulatory inquiries and issues related to the disposition of the firm's assets.” The headstrong Corzine was attempting to transform MF from a vanilla brokerage firm into a full-service investment bank, similar to the model he presided over at Goldman Sachs. One of the cornerstone's of his strategy was to increase risk across the business, and in particular, in MF Global's proprietary trading accounts. Corzine was responsible for a $6.3 billion bet on European sovereign debt, which capsized the firm on Monday. According to

, MF Global was leveraged at about 80-1, which is absolutely ridiculous - it makes Lehman Brothers' leverage prior to its implosion look conservative. The company had around $41 billion in assets, $39 billion in debt, and equity capital of $500 million along with $325 in investment grade bonds, according to Forbes. Given this degree of leverage, Corzine's positions in European sovereign debt didn't have to necessarily go bad in order to bring down the firm. In fact, the investments could still end up paying off, but Corzine and a solvent MF Global won't be around to reap the rewards if they do. What happened was that as the debt crisis intensified, regulators forced MF to raise capital levels to back the trades. On October 25th, MF reported a whopping $190 million quarterly loss and the wider market became aware of the size and scope of its European sovereign holdings. Suddenly, counterparties became reluctant to trade with MF without significantly increased collateral, clients began yanking funds, and MF Global's credit rating was slashed to junk status. The riskiness of Corzine's bets combined with the firm's leverage triggered a classic crisis of confidence which turned into a liquidity crisis in short order. Over the weekend it appeared that a deal would be struck for the embattled firm. Interactive Brokers Group

had a handshake deal late Sunday evening to acquire MF, but understandably walked away at the last minute when they discovered funds missing from client accounts. The following morning, MF declared Chapter 11 bankruptcy. As of Friday, roughly $630 million in client funds remain unaccounted for, and the FBI and a myriad of regulatory agencies are investigating what happened. If it turns out that the client funds were diverted in an effort to save the firm from capsizing in its final days, it is possible that Corzine himself could be seeing the inside of a jail cell - although that is complete speculation at this point. The writing could be on the wall, however, as the New York Times is reporting that Corzine has hired Andrew F. Levander, a prominent criminal defense attorney. The good news in all of this? At least Corzine had the good taste to turn down his $12 million severance package...