Washington ? Senators of both parties lashed out Monday at the Securities and Exchange Commission for what they said was its failure to detect abuses in a mutual fund trading scandal enveloping the $7 trillion industry with a traditionally clean image.

SEC officials and state law enforcers, who are investigating and prosecuting cases, drew a picture at a Senate hearing of abuses so widespread in the industry and among brokers that Sen. Peter Fitzgerald, R-Ill., was moved to ask: “We’re talking about serious, wholesale criminal violations coming to light, aren’t we?”

Stephen Cutler, the SEC’s enforcement director, told the committee he wanted to “emphasize that we will aggressively pursue those who have violated the law and injured investors as a result of illegal late trading, market timing, self-dealing or any other illegal activity we uncover.”

The agency’s investigation is “continuing on multiple fronts,” said Cutler, who presented a survey detailing frequent abuses. These included one finding that a quarter of the nation’s largest brokerage houses helped clients illegally trade mutual funds after hours.

Sen. Susan Collins, R-Maine, head of the Senate Governmental Affairs Committee, said she found it shocking that the trading practices, “which benefit a select group of individuals at the expense of the vast majority of mutual fund investors, continue.”

“I question why the Securities and Exchange Commission … has failed to detect these practices, to impose appropriate restrictions on them, or to penalize those who appear to be misusing investors’ money,” Collins said.

And Sen. Joseph Lieberman, D-Conn., a committee member, told SEC Chairman William Donaldson in a blistering letter that the agency “was far too late to the table in addressing these problems.” He requested detailed information on the SEC’s response and plans.

Companies must be forced to pay back to investors the hefty fees received for managing mutual funds while they allowed fund trading abuses to occur, New York Atty. Gen. Eliot Spitzer told the hearing.

“This number will be big. It will impose pain, and it should,” he said.

Management fees reaped by mutual fund companies totaled more than $50 billion last year, Spitzer said.

Repayment of management fees would be in addition to restitution to shareholders of profits made from alleged improper trading, he said.

New York Atty. Gen. Eliot Spitzer testifies before a Senate committee during a hearing in Washington. The committee is investigating abuses in the mutual fund industry.