The MF industry especially fund managers are in a state of shock. The fear of an investment decision being questioned many years down the line has left many wondering whether the risks involved with being a fund manager are worth it, CNBC-TV18 reports.

All may not have come to a grinding halt, but there's certainly a lurking sense of gloom in the mutual fund industry. This is all because a six-year-old CBI investigation has ended up chargesheeting two fund houses, naming, among others, one of the industry's youngest equity CIOs Sandeep Sabharwal.

For most fund managers this SBI Mutual Fund case is a worrying reminder of previous cases where star equity fund managers have been named and not been implicated or named and implicated but exonerated by the courts.

For more on this story read: SBI MF under CBI scanner

For instance: recently the commodity exchange NCDEX brought up a 2001 SEBI case where the CIO of Reliance mutual fund - Madhusudan Kela's name appeared.

The issue came up just as Kela and his team collected a record billion dollars for the largest Indian equity fund. Though Kela was not implicated, controlling the damage to reputation was a tough task.

Prior to this, the star equity fund manager of the 90s, Samir Arora, was allegedly accused of insider trading. While Arora subsequently got a clean chit from the court, the damage to his reputation seemed to have been done.

The big question haunting fund managers is who will take the responsibility for decisions that they may not even have been a direct party to. They say their career and reputation are always in danger of being sullied. So many are toying with the idea of eventually joining private equity firms.

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