Charles Schwab & Co., Inc., Charles Schwab Investment Advisory, Inc. and Schwab Wealth Investment Advisory, Inc. thought they had an appealing hook for their robo-advisory product, pitching it as having “no advisory fees.” According to a recently settled SEC enforcement proceeding, however, Schwab allegedly earned amounts equivalent to advisory fees by depositing preset cash allocations in their product’s investment portfolios in an affiliated bank, which made money by lending out the clients’ cash. The respondents allegedly used materially misleading advertisements for the product and failed to provide full and fair disclosure of the conflict this created, how the cash allocations were determined and the impact of those allocations on performance. They were hit with disgorgement of the profits generated by the bank on the cash balances, forced to pay a $135‑million fine and compelled to retain a compliance consultant. Although this proceeding concerned an automated advisory service, the principles about full and fair disclosure of conflicts, fees and expenses are relevant to all fund managers. This article discusses the alleged misconduct and the terms of the settlement order. See “SEC Sanctions Robo‑Adviser for Misleading Marketing and Improper Solicitation Practices” (Jun. 24, 2021); and “SEC Settles First Two Enforcement Actions Against Robo-Advisers” (Feb. 14, 2019).