Clients of an advisory firm lost millions when a hedge fund -- managed by an investment novice and debt collector -- went bad, according to the SEC.

The co-owners of Buffalo, N.Y.-based Reliance Financial Advisors were hit with fraud charges, the commission said this week, for allegedly misleading clients about the risks associated with the hedge fund they were recommending, and dramatically overstating the experience of the fund manager, Scott Stephan, who has agreed to settle similar charges with the agency.

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