Japan Securities and Exchange Surveillance Commission recommends administrative action against Capital Partners Securities over improper TRY bond sales

The Japan Securities and Exchange Surveillance Commission has recommended that the Prime Minister and the Commissioner of the Financial Services Agency take administrative action against Capital Partners Securities Co., Ltd. after an inspection found improper solicitation of TRY-denominated foreign bonds and wider failures in internal controls and management. Sales staff gave customers misleading certainty about future bond prices and profits, highlighted high yields and issuer ratings while failing to explain loss risks, and similar practices continued after some staff moved to affiliated financial product intermediary Capital Financial Advisors Co., Ltd. TRY bonds accounted for about 40% of the firm’s foreign-bond business across 10 currencies as of 17 October 2025. The commission also found ineffective oversight of the affiliated intermediary, a formalistic review of callable TRY bonds introduced in December 2023 despite existing customer losses on earlier TRY products, and weak controls across sales management, compliance and internal audit. Management had not fundamentally reviewed incentive structures that rewarded high-commission emerging-market bonds, and the commission concluded that the firm had engaged in prohibited solicitation by presenting uncertain matters as certain and had insufficient measures to prevent misconduct by entrusted intermediaries.