I know this is a popular sentiment, but I really disagree. It's not possible for a CEO to have such precise and detailed vision into a company that he or she can preclude the possibility of nefarious action by everyone in the company.
Everyone who's been working for more than a couple years will likely find themselves having to decide whether to tell someone up the chain there's a problem. Now imagine the CEO, who is at the top of lots of chains. You're expecting that bad news always finds its way to the top, and that one person has the time to supervise those chains enough that unreported problems are ferreted out.
The blame the CEO for everything mentality is just another way of saying "We don't know if it's your fault, but we're blaming you." I don't think an innocent CEO should fall on his sword in cases like this. A genuinely innocent CEO should be leading the charge and cleaning house.