While brokers, bankers and hedge funds certainly played a role in the fund trading scandals, mutual fund executives wittingly turned a "blind eye" to the misdeeds, Paul Roye, the SEC’s top fund regulator, told attendees at the ICI Investment Management conference in Palm Desert, Calif., yesterday.

And that blind eye has most definitely hurt shareholders and wrought "long-term damage to the industry," Roye said, The Wall Street Journal reports.

The SEC will expand its staff of inspectors and now has an oversight board, the director of the division of investment management said. Reiterating earlier remarks of how the SEC is grappling with resistance to the "hard 4 p.m." close, Roye said that the Commission has now received 1,000 comment letters, most of them against the idea. Beefing up technological oversight of funds is one alternative the SEC is considering, Roye said.

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