WRAPUP 3-MF Global CEO Jon Corzine quits under fire

* Corzine hires prominent white-collar defense lawyer

* Conflicting reports about missing customer funds

* JPMorgan says doesn't know if it holding missing money

* Corzine says decision difficult but voluntary

By Jonathan Stempel and Christopher Doering

Nov 4 (Reuters) - Jon Corzine, one of Wall Street's best-known stars, stepped down as MF Global Holdings Ltd's chairman and chief executive after his bets on European debt drove the futures brokerage into bankruptcy.

The departure was announced hours before conflicting reports surfaced about the whereabouts of $633 million of missing customer money, whose disappearance derailed MF Global's effort this week to quickly sell a variety of assets.

JPMorgan Chase & Co late Friday said it had no information about whether balances in MF Global accounts at the bank contained any of the missing customer funds. It also declined to disclose the balances of those funds.

"What we can confirm is that the accounts and their balances have been and continue to be wholly transparent to MF Global and the recently appointed... trustee." JPMorgan said in a statement.

Earlier in the day, Bloomberg News said customer funds had been found in a JPMorgan custodial account holding $658.8 million, citing two people with knowledge of the matter.

Corzine, a former chief of Goldman Sachs & Co , characterized his abrupt departure from a company he once joked as "too small to care about" as "difficult" but voluntary.

It was effective on Friday, four days after MF Global sought bankruptcy protection, a company spokeswoman said.

Corzine, 64, joined MF Global in March 2010 as his ticket back to Wall Street, after stints as a U.S. senator from New Jersey and one-term governor of that state. He had run Goldman from 1994 to early 1999.

But when MF Global's $6.3 billion bet on sovereign debt from Belgium, Ireland, Italy, Portugal and Spain went public, counterparties and investors headed for the exits.

The New York-based company's decline accelerated last week as it revealed more details about this exposure, posted a larger-than-expected quarterly loss, and was downgraded by major credit rating agencies to "junk" status.

Many investors were also spooked by MF Global's roughly 30-to-1 leverage ratio, based on more than $40 billion of assets and just $1.4 billion of equity. Corzine himself has said having that much leverage was unacceptably high.

The bankruptcy is the seventh-largest in U.S. history, according to BankruptcyData.com and Reuters data.

THE MIGHTY HAVE FALLEN

"My how the mighty are fallen," said Jim Rogers, a prominent commodities investor. "It is inconceivable to me he would do this after Refco," he added, referring to a brokerage that failed in a 2005 accounting scandal.

MF Global's problems this week triggered steep declines in stocks of other financial companies, such as Morgan Stanley and investment bank Jefferies Group Inc .

Jefferies, seeking to soothe investors, said on Friday it had a net short position in sovereign risk of Greece, Ireland, Italy, Portugal and Spain.. Its shares closed up 0.5 percent on Friday, but lost 18 percent for the week.

"The idea that you might be holding European debt is very frightening" to markets," said Franklin Edwards, a Columbia Business School professor specializing in futures markets, regulation and governance. "There is so much uncertainty."

It is unclear how Corzine's resignation might affect the various ongoing investigations. Neither MF Global nor Corzine has been charged with wrongdoing.

Corzine said he intended 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."

James Giddens, the trustee overseeing the liquidation of the company's MF Global Inc unit, is working with CME Group Inc and other commodities brokers to move about 50,000 accounts to new clearing firms.

Giddens said his team is "securing" MF Global offices in Chicago and New York, plans to work through the weekend to transfer large accounts, and will try through next week to transfer individual accounts. Corzine's departure will not affect that process, a spokesman for Giddens said.

CME, meanwhile, said 5,300 accounts, about one-third of the total held there, and $410 million of CME Clearing-held collateral bad been transferred on Thursday.

'GREAT SADNESS'

In his statement, Corzine said his departure is best for MF Global and its stakeholders.

"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," he said.

MF Global said Corzine is not seeking severance. He had been entitled to $12.1 million in severance, prorated bonus and other benefits if he were let go without cause, a July 7 regulatory filing shows. The severance portion was $9 million.

Corzine has hired prominent white-collar defense lawyer Andrew Levander of the law firm Dechert to represent him in cases that might stem from the bankruptcy filing, a legal source briefed on the matter said on Thursday.

Chief executives often step down as their companies face federal probes or bankruptcy. Leaving might also give him greater flexibility in dealing with authorities.

"If you're no longer with the company, it gives you freedom to respond from the perspective of solely protecting your own interest," said Barry Pollack, a partner at law firm Miller & Chevalier specializing in white-collar defense.

Chief Operating Officer Bradley Abelow and lead director Edward Goldberg will stay in their positions, MF Global said.

STALLING REFORMS

Brokerages are required to keep customer money segregated from their own cash. Questions about the integrity of MF Global client accounts have also attracted the attention of the Federal Bureau of Investigation.

"To the extent there were diversions of funds in segregated accounts, or funds that were lost, it would certainly violate regulatory rules and perhaps even rise to the level of securities fraud," said Edwards, the business school professor. "We just don't know the facts."

It is unclear why regulators such as the Securities and Exchange Commission, Commodity Futures Trading Commission and Financial Industry Regulatory Authority did not do more to rein in MF Global's risk-taking, coming so soon after the 2008 financial crisis.

Last year's Dodd-Frank financial reforms have yet to take full effect, and would likely have done little to avert MF Global's collapse.But Corzine played a key role in stalling reforms designed to stop firms from using customer funds for proprietary trades.

"Many firms, including MF Global and Senator Corzine specifically, have asked us to hold back on tightening up our regulations," CFTC Commissioner Bart Chilton said in the text of a speech for delivery on Friday.

Corzine's original decision to join MF Global surprised many on Wall Street.

He has referred to himself as a "recidivist banker," and said he was willing to join a small Wall Street company because financial regulatory reform would force big banks to shrink.