UnionBanc Investments Services LLC, a broker-dealer in Glendale, Calif., has been fined $100,000 by the Financial Industry Regulatory Authority for allegations that it improperly supervised the sale of variable annuities over a two-year period.

The fine—part of a consent agreement between UnionBanc (UBIS) and Finra in which the firm neither admitted to nor denied the allegations—arose from findings by the self-regulatory organization that there were lapses in the broker-dealer's oversight of variable annuity sales between 2016 and 2018.

Finra said the broker-dealer failed to provide disclosures that compared the living benefit value of variable annuities when they were exchanged with one another. Finra noted that the information is important because, in such exchanges, customers stand to lose some or all of their existing annuity's living and death benefits.

"While the disclosure form compared the death benefit value of the existing annuity and any reduction in the death benefit due to the exchange, it did not include the same information for the living benefit value," Finra stated in the consent agreement. "As a result, in numerous instances, the principal approving the variable annuity exchange did not have material information about the loss of living benefits to form a reasonable basis that the exchange would be suitable."

During the two years in question, about 61% of the 454 variable annuity exchanges at UBIS involved a living benefit, Finra said. "The value of the accrued living benefits in the existing variable annuities totaled almost $51 million," Finra added.

Finra also alleged that UBIS failed to ensure that customers were informed of the key features of buffer annuities—also known as variable indexed annuities—that promise returns tied to the performance of a market index. Finra noted that such annuities can include protections that act as a "buffer" against losses, but that "this is a partial protection only; if the negative return exceeds the buffer, there is a risk of loss of principal."

UBIS, a subsidiary of Mitsubishi UFJ Financial Group, employs 406 registered representatives in 239 branch offices, according to Finra.

Mitsubishi UFJ Financial Group did not respond to a request for comment by press time.