NEWS ANALYSIS : Are Japan’s Financial Storms Over? : * Pacific Rim: Resignations and the passage of long-awaited reforms have some saying the era of scandal is over. But critics aren’t so sure.

With two more resignations and the passage of a long-expected financial reform bill Thursday, the dark clouds of scandal that loomed over Japan’s financial community for several months now appear to have been blown away.

But like typhoon winds that battered Japan during the past month, many critics fear that the storm over stock market manipulation, unfair payoffs and banking fraud that plagued Japan this summer will prove no more than just another seasonal event resulting in little fundamental change.

“The amendment of the securities transaction law is a major step towards introducing clearer rules of the game into the market to remove ambiguity,” said Toyo Gyohten, a former vice minister of international affairs at the Ministry of Finance. However, he added, “I don’t think Japan has reached a conclusion on what should be next.”

The bill makes it illegal for securities companies to reimburse clients for investment losses and prohibits investors from receiving compensation from brokers.

Finance Minister Ryutaro Hashimoto tended his resignation after passage of the bill, saying he had accomplished what he had set out to do. The resignation is largely a formality since Hashimoto will remain in his position until late this month, probably just days before the Cabinet is dissolved to allow the newly elected prime minister to form a new Cabinet.

Coincidentally, Taizo Hashida, chairman of Fuji Bank, also resigned Thursday to take responsibility for “profit-minded” policies that were blamed for several cases of fraud at the bank. Bank employees forged about $2 billion worth of certificates of deposit for customers, who then used the certificates to borrow money from other financial institutions.

Fuji Bank has also been the target of public criticism over the publication of a book by a bank employee who blamed management for pushing employees too hard and implicitly requiring them to cut corners. He said employees were told at one company meeting to “work until you urinate blood.”

Although legislators passed resolutions calling for more comprehensive reform to cover stock manipulation and bank fraud, the approved law focused on eliminating compensation schemes deemed unfair.

The new bill bans, for example, special accounts called eigyo tokkin , in which brokers have discretion over how a customer’s money is invested and have been known to guarantee customers fixed returns on their investment.

Tax authorities revealed earlier this year that brokerage houses had paid sums of up to $1.6 billion to compensate customers for losses, or below-expected returns on these accounts, The brokerages were trying to deduct the payments, which followed Japan’s stock market crash in early 1990, from their taxes.

What began as a tax issue turned into a question of equity as individual investors complained that they were not compensated for their stock market losses.

The lack of strict penalties in the new bill demonstrates to many the government’s lack of commitment to regulating Japan’s financial markets. Securities companies convicted of paying compensation to investors could be sentenced, under the new law, to up to one year in prison or fined $7,500.

Gyohten, however, said Japan as a society must make some fundamental decisions about what kind of regulatory system it wants before making progress on reform. “The fundamental question is whether society and the political climate is prepared to accept the principles of risk,” Gyohten said.

In spite of such skepticism over the likelihood of reform, there are some signs investors are ready to jump back into the casino. Japanese stock prices have begun to recover in recent weeks with many of the gains coming in the most speculative stocks.