All 1,066 MF Global brokerage workers laid off

NEW YORK (CNNMoney) -- The ax fell Friday for all 1,066 employees of bankrupt MF Global's brokerage unit, the trustee overseeing the liquidation of the company announced.

While the terminations are effective immediately, the employees will be paid through Nov. 15 and will have health coverage through the end of the month, but they will not get severance. (MF Global: Sorting through the debacle.)

MF Global (MFGLQ) has been prohibited from executing trades since filing for bankruptcy protection on Oct. 31. Federal regulators and other authorities are investigating a reported $633 million that is reported to be missing from its clients' accounts.

MF Global's holding company had about 2,900 employees at the end of the previous quarter, but the brokerage business that is being liquidated was the largest part of the business. The holding company is in a separate Chapter 11 bankruptcy proceeding that continues to operate during reorganization.

The trustee's statement said that between 150 and 200 former employees are being hired to assist in the wind down of the brokerage business and processing of bankruptcy claims.

The firm went bankrupt after revealing $6.3 billion in exposure to the sovereign debt of troubled European economies, which led to a cut in its credit ratings and trading partners demanding higher level of collateral to complete deals.

Former CEO Jon Corzine, who resigned from his post on Nov. 4, tried to negotiate a sale of the company the weekend before the bankruptcy filing. But that potential sale to Interactive Brokers (IBKR) fell through when an examination of the books first suggested the money missing from customer accounts.

The trustee also announced Friday that about 17,000 of an estimated 50,000 commodity accounts of MF Global clients successfully transferred back to the customers, although the cash and some of the collateral that was in the accounts remains frozen.

The trustee also announced it is exploring ways to immediately vacate MF Global's offices in New York, and that office will be closed as soon as possible. Office space in Chicago will continue to be leased for an undetermined but limited amount of time.