LPL Financial LLC, a unit of brokerage firm LPL Financial Holdings Inc., has agreed to reimburse more than half a million dollars to investors to settle complaints over switching annuities, a securities regulator said on Tuesday.

LPL Financial acknowledged that certain annuity-switch transactions were conducted without disclosing fees for cashing in or surrendering the annuity, said William Galvin, Massachusetts' secretary of state.

"Annuity switching" happens when a broker encourages a client to trade in an older annuity to buy a different one, often at significant cost to the client and benefit to the broker.

At the Financial Industry Regulatory Authority, Wall Street's industry-funded watchdog, variable annuities follow stocks and mutual funds as the third most common source of complaints.

An annuity is a type of insurance product that offers investors steady income payments, typically in exchange for a lump-sum investment.

In recent years, LPL Financial's parent has been hit with fines and rebukes from regulators over failure to supervise sale of products such as non-traded real estate investment trusts, oil and gas partnerships and annuities.

According to a statement from Galvin's office, LPL Financial, during a regulatory review of the company's variable annuity switch practices, said it had now implemented policies to ensure that customers are told about transaction fees.

The agreement reached between the company and the regulator covers 157 transactions involving senior citizens in Massachusetts.

LPL Financial offered to reimburse the investors within 15 days and submit a payment report within six months, Galvin said.