By Katherine Hamilton

Ally Financial's subsidiary will pay $500,000 to settle allegations it failed to disclose a conflict of interest to its customers about its the robo-advisor accounts.

The Securities and Exchange Commission said Monday that Ally Invest started offering the cash-enhanced robo-advisor accounts in 2019. With the accounts, Ally Invest allocated 30% of the total portfolio in each client's account to cash, while the other 70% was invested in a mix of securities selected by the company.

Cash in the accounts was managed by a non-affiliated clearing broker, who deposited the money at various banks, including Ally Invest's affiliated bank, where the cash could be loaned out and accrue interest. The non-affiliated broker received interest earned on the cash deposits, and then paid Ally Invest's affiliated broker-dealer a rebate.

The SEC said Ally Invest did so to make up for revenue lost from not charging an advisory fee on the robo-advisor accounts. From 2019 to 2025, Ally Invest didn't adequately disclose that conflict of interest to its customer, the SEC said.

Ally Invest has been ordered to notify affected investors of the settlement terms and pay a civil penalty, which will go toward the U.S. Treasury's general fund.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

March 23, 2026 18:48 ET (22:48 GMT)

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