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Stock market experts have pointed out that the recent case of unethical practices by mutual fund managers raises several questions as the hard earned money of retail investors is involved.

Due to the actions of the guilty, stocks have been bought at higher prices, fund performance has been manipulated, experts pointed out.

There are demands that the Finance Ministry should get involved and expand the probe to involve IT, ED and catch the guilty and put them behind bars and set an example for the entire industry.

Experts are against a monetary penalty to compensate for front running by mutual fund managers.

They point out that the modus operandi for these kinds of practices involved small time brokers with no research or trading capabilities getting a lot of business from the fund.

It is also being questioned as to how the small time brokers manage to cross blocks with the fund. For this the small time brokers managed to source liquidity from other brokers and then crossed it with the fund.

The money trail can lead back to checking the accumulation in a small/mid cap stock before the fund bought it and from whom did the fund source the block.

The investigation will also need to probe as to how did the fund manage to find sudden liquidity in an illiquid name.

Sources say the scam is not just about front-running but getting cuts back in cash from the brokerage commissions paid to brokers.

The probe will also show the concentrated holdings of the portfolio and if it was managed to show fund performance.

Experts have also questioned as to how the senior management including the CIO/COO/Compliance Head were not aware of the ongoings.

In addition, how were the accused fund managers allowed to work for 2 months while the investigations were going on. Why were they allowed to clear their trail? Why shouldn't the CIO/COO be sacked for it, are some of the questions being posed by agitated market experts who say that there is much bigger money involved which could run into hundreds of crores.