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Few people in the mutual fund industry, outside of those who have been charged in the scandal, have been under as incredible pressure or faced as tough questions in the past few months as Paul Roye, the nation's top cop for the mutual fund industry.

When New York Attorney General Eliot Spitzer exposed the market timing and late trading abuses with the Canary Capital case on Sept. 3, the biggest question for Roye, of course, was why had the SEC failed to detect these endemic abuses?

When Congress got in the act, grilling the industry through its endless hearings and then with Mutual Funds Integrity and Fee Transparency Act in the House and six other mutual fund reform bills in the Senate, the question became, is the SEC even equipped to supervise the industry?

After the director of the SEC's regional office in Boston resigned over the embarrassment of having turned away a whistleblower and Spitzer called for Roye's own resignation, the question then became, should Roye step down?

In the nine months since the scandal first broke, the SEC has reemerged as capable of governing the industry, in large part due to sweeping reforms that Roye and his staff have recommended. In this time, the SEC has come out with 14 separate rulemaking adoptions, proposals or concept releases and brought 15 enforcement actions against fund companies and executives. The chairmen of the Senate Banking Committee and the House Financial Services Committee have both recently tipped their hats to the SEC and indicated that the reforms it is undertaking may preclude the need for additional legislation. And even the General Accounting Office recently concluded the SEC is doing a good job.

Money Management Executive Editor Lee Barney recently posed some of these tough questions to Roye, including why the SEC and fund directors were blind to the trading abuses, whether the scandal is over and if the historic reforms the industry is now going through will actually lead to meaningful change.

MME: Is the fund scandal over?

Roye: We've continued to gather information, and you are going to see a steady flow of cases.

The cases aren't going to be based on radically different theories than those that have already been brought, but as in the recent MFS case on directed brokerage, they will be variations of what we have already seen. Some of these cases won't only involve funds, but, for instance, variable annuities, particularly since you can move into and out of funds within annuities without tax consequences.

MME: Will more executives be sentenced to jail?

Roye: I think there's an interest in our enforcement division in pursuing certain cases criminally, and they are making referrals to U.S. attorney offices.

MME: Will there be enforcement actions against independent directors?

Roye: In every one of these situations, the question is being asked, "Where were the directors, what did they know and what did they do?" We are finding, though, that in a number of cases, the directors were duped along with the investors.

MME: Could the scandal move into separately managed accounts?

Roye: Here, you don't have to worry about pricing situations, but there is the potential conflict of interest at investment firms that run both an SMA or a hedge fund alongside a mutual fund, to favor them over the mutual fund because of their higher performance fees.

So, you may see cases against advisers running private accounts. We are looking at fair trade allocations and whether they are disclosing their conflicts, or managing their conflicts in a way that does not disadvantage investors.

MME: Eliot Spitzer has certainly thrown around a number of shocking and theatrical barbs, even saying the industry is filled with "vermin." What was your reaction when he said you should step down from your position?

Roye: Let me put it this way. I don't work for Eliot Spitzer. I work for Chairman Donaldson and the other commissioners. I've been here more than five years, and I'll stack my record up against anybody who's ever been in the position.