LIKE buses, stock market scandals have the habit of coming in bunches. Why this is so is an interesting question, since the fall from grace of financiers and tycoons frequently marks a shift in market eras. Recent weeks have seen the Securities and Futures Commission (SFC) bring a flurry of actions, throwing open to public scrutiny the seedier side of Hong Kong's finance industry. Longstanding frustrations inside the commission have been forgotten and its public identity is rapidly being transformed from rule maker to gun-toting enforcer. Like any team on a winning streak, confidence is running high and further successes are anticipated. Obvious parallels include the US regulators' battle to bust Wall Street's insider dealing rings in the mid 1980s, the fallout from London's corporate scandals of the early 1990s, the downfall of Australian entrepreneurs such as Alan Bond, and even Japan's crackdown on the country's largest brokerage, Nomura, for running price support and client compensation schemes. The spate of actions could of course be nothing more than the SFC clearing the deck of investigations that have been running for years. SFC chairman Robert Nottle said their concentration in a few weeks was ''pure coincidence''. Still, the managing director of one securities firm said: ''Read between the lines and the sub-text of the last few weeks has been a display of muscle with the message, 'We're here and we're not taking prisoners'.'' Now Hong Kong has in place the type of regulatory apparatus comparable to other first division markets. And having watched some of the biggest names in the territory be subjected to censure and punishment, the big questions are: how deep does the rot run and how far will the regulators travel to obtain scalps? Few doubted the abuse of corporate privilege for personal gain highlighted within the World Trade Centre Group report and the action against Standard Chartered Asia continues. But there are those who doubt the need to push too hard when enforcing the rules. Last week's knee-jerk reaction from legislator Chim Pui-chung that over-regulation threatened to choke the free market may have come from Hong Kong's unacceptable face of capitalism but his views were widely shared, if not publicly articulated, by finance and corporate leaders. ''What we have is a group of regulators who are pushing their noses into every area of the business. I suspect it has much to do with advancing their own careers and winning trophies,'' said the head of one brokerage. The extension of the SFC's powers to make preliminary inspections of company records before initiating an inquiry has been taken by some as a dangerous widening of its franchise. Although supporting the Legislative Council's amendment to the 1993 Securities and Futures Commission Bill, one former senior employee at the SFC said: ''The ICAC [Independent Commission Against Corruption] extended its mandate into all sorts of public matters but if the SFC is to retain the confidence of the industry it should avoid behaving like a policeman. ''It is very important that it remains pro-industry and does not treat all issues as black and white.'' This is the watchdog's dilemma, as it undoubtedly is a policeman. The bread and butter of its work remains regulating the probity and lawful behaviour of brokers and other financial intermediaries. The licensing and compliance departments, although often referred to as the ''grunts'' within the organisation, still account for the majority of manpower and time employed by the SFC. Monitoring brokerages' capital adequacy positions and poring over trading sheets to check spread widths are acceptable may not be the most exciting of its roles but they remain the fundamental reasons for its existence. Yet unlike the boys in green, the commission has to wrestle with no clear separation of powers between law maker and enforcer. It is intimately involved in forming policy with both the stock exchange and Government and, as such, carries responsibility for broadening the range of products available and methods of trading them. With the auto-matching system introduced last year and new derivative products such as regulated short selling, to name but a few cases, the SFC is working hand in glove with the exchange to establish a market framework. The exchange is more concerned than most who will succeed the highly regarded Robert Nottle as chairman of the SFC when he leaves his post at the end of this year. ''The last thing we need is a gunslinger,'' said Paul Phenix, deputy head of the stock exchange. Since its birth in 1989, the SFC has had a life cycle determined by the almost entire absence of regulatory codes that were in place when it took up the task. Establishing a regulatory structure took up its first two years and then, in the face of criticism it was doing little to enforce the rules, came what Mr Nottle has frequently called the ''phase of supervision and enforcement''. The new mandate to make preliminary inquiries into alleged malpractice is an important step to involve the organisation from an early stage in the investigative process. ''After all, they are the people with the supposed knowledge to unravel these kinds of affairs. It's no good giving many of these cases to the Attorney-General's office or the Commercial Crimes Bureau because frankly they will never understand most of them,'' said a former employee of the SFC now at a major investment bank. Surprisingly, Mr Nottle expressed frustration at the level of publicity the organisation's high-profile busts received during the last few weeks. However, if we are now being told some of the financial establishment's most respected and powerful members have been engaged in gross misconduct, a high level of interest is inevitable. If the fruits of enforcement have only begun to manifest themselves, the picture so far revealed could well call for a ''gunslinger''. New codes are one thing but if a new regulatory environment is to be wrought, particularly in the context of 1997 and the anticipated harmful effects on market integrity that may bring, there are those who believe change needs to be driven by high-profile investigations that hurt their subjects. ''Look at Standard Chartered Asia. They knew the risks but judged the rewards to be worth it. There was a calculated decision of the likely penance and quite simply it was calculated to be worth it,'' said a broker employed by Standard Chartered at the time. They did, after all, get Al Capone for tax evasion and, if recent cases are representative, we are being told the boardrooms of Hong Kong offer a latter-day version submerged below the veneer of corporate respectability.