What we can learn from Jon Corzine

November 4, 2011, 8:03 PM UTC

By Shelley DuBois, writer-reporter

FORTUNE — Jon Corzine, what were you thinking? It’s going to be tough to salvage the good parts of a long, lucrative career in finance after the dust clears from this current mess, even in its rosiest of outcomes.

Friday, Corzine announced that after about a year holding the job, he is resigning his position as CEO of brokerage firm MF Global (MFGLQ). He’s chosen to head for the exit right after the company filed for bankruptcy and while it is under investigation by the FBI based on claims that it may have used clients’ money illegally to get a handle on its numerous financial problems.

It’s almost too easy to question some of Corzine’s management practices after the fact. But this seemed preventable. In May 2010, two months after Corzine took charge as CEO, Fortune called out some of the company’s potential problems, and questioned why on earth Corzine would take the job. No one knows the inner workings of the man’s mind, but an analyst at Sandler O’Neil suspected in October that Corzine took on the turnaround challenge so he could be seen as “going out on top.”

If that was his thinking, that should have been one of the brightest red flags surrounding his decision to take the job. It’s common to think that you can make up for past failures by succeeding in the future. In the financial world, traders can easily fall prey to this thinking. But the greater the personal stake we have, the tougher it is to make logical choices. If Corzine joined MF Global with something to prove, he may have missed some of the warning signs on the brokerage firm’s front door.

And there were a couple. The company’s share price plummeted after it spun off from hedge fund Man Group in 2007, it lost $141 million in 2008 when a rogue trader made bad bets on wheat, and far too much of MF Global’s revenue has been spent on executive pay.

When Corzine took charge, he had earned an impressive amount of wealth, but his resume was speckled with some ego-bruising losses.

He was the co-CEO of Goldman Sachs (GS) in the 1990s, leading the company to its lucrative initial public offering in 1999, but he ultimately lost the job to competitor Henry Paulson. He served as a U.S. Senator for New Jersey from 2000 to 2005, when he ran for governor, and won. He was not re-elected for a second term.

Because of his high profile career, Corzine’s move to MF Global attracted attention. Then, all of a sudden, a quietly struggling company was yanked into the limelight, where it proceeded to belly flop, as could Corzine’s reputation.

At best, he’ll be viewed as an out-of-touch CEO who couldn’t keep track of more than $600 million worth of investor money — lost, at first — that reportedly turned up in a custodial account at JP Morgan. And while there’s no movement on whether Corzine will be criminally charged, he did hire criminal counsel today. If investigators uncover evidence of wrongdoing, Corzine could be tied up in litigation for years.

Instead of ending his career as a successful, if not triumphant, player in finance at the age of 63, Corzine is now looking at concluding his professional life with a big, embarrassing bang.

In terms of his run as a manager, it doesn’t really matter whether he drove MF Global into the ground or merely hopped aboard a defective company during its descent: Corzine is sitting in the captain’s seat among the wreckage. For managers looking to preserve their legacy, it might be a better idea to stay grounded.