Does a financial adviser have a fiduciary duty to protect a client from being scammed out of their retirement savings?

Or can the adviser “simply watch their diminished-capacity client walk off a financial bridge and into the bay?”

That’s the question Justice Andrew Mead posed as Maine’s highest court began mulling whether R.M. Davis Inc., a prominent Portland-based wealth management firm, should have done more to protect a retired couple who transferred $1.3 million to bitcoin scammers.

Five justices of the Maine Supreme Judicial Court heard oral arguments Tuesday in Portland from lawyers representing the firm and the plaintiffs, Bruce and Linda MacMillan, of Falmouth. The court is expected to issue a decision in the coming weeks.

The couple filed a lawsuit in June 2023 claiming R.M. Davis had a responsibility to protect them from such unimaginable losses and a growing threat to many investors. They had been clients for over 15 years, had always handled their investments with predictable restraint and the firm had trained its staff to spot red flags of elder financial exploitation, according to court papers.

The Business and Consumer Court in Portland concluded that the firm owed the couple no such protection. MacMillan appealed the lower court’s decision to the Maine Supreme Judicial Court, which hears appeals as the Law Court, hoping for a second chance at the jury trial he and his wife initially sought. She died last June while in memory care at OceanView in Falmouth.

Throughout the half-hour hearing, the justices examined whether R.M. Davis and George Carr, the MacMillans’ financial adviser at the firm, had a fiduciary duty to protect the MacMillans. They also questioned whether investors have the right to spend their money as they wish, “even if it’s stupid,” said Chief Justice Valerie Stanfill.

THE SCAM

In February 2022, Bruce MacMillan directed Carr to liquidate three Fidelity investment accounts worth a total of $1.3 million.

Carr asked what MacMillan and his wife planned to do with the money, noted there would be significant income tax implications and questioned whether the MacMillans were taking the money to another firm, according to court papers.

MacMillan, a retired communications specialist who is now 80, readily admits that he lied when he told Carr he had “an exciting real estate opportunity,” as he had been coached by cunning online scammers.

Soon after, MacMillan transferred the couple’s life savings to a bitcoin account, which the scammers said was overseen by the Social Security Administration and would be protected from imminent theft. Looking back, he describes the experience as being in a “scam trance.”

Bruce Hepler, the MacMillans’ attorney, told the court Tuesday that Carr should have recognized obvious red flags of diminished capacity and elder financial exploitation when MacMillan directed Carr to liquidate his investment accounts.

“We’re not asking for this court to make a big step here at all,” Hepler said. “It’s already the standard in the financial community. … How could he not see all the red flags? It’s absolutely jaw-dropping.”

DIMINISHED CAPACITY

Susan Weidner, R.M. Davis’ attorney, told the court there is no evidence on record that MacMillan had diminished capacity and the firm had no fiduciary duty to interrupt his efforts.

Justice Jeffrey Hjelm countered that R.M. Davis did know that MacMillan was making a “very unusual financial decision” and that would have been a “tip off” that something was wrong.

“I think the plaintiff’s argument is that even though there may not have been direct evidence of cognitive problems, the conduct involved in these transactions was a red flag,” Hjelm said.

R.M. Davis is registered with the SEC, as is Carr, a principal of the firm. Founded in Portland in 1978, R.M. Davis was named among the top 100 financial adviser firms in the U.S. by CNBC in 2021 and 2023, and it now manages over $7 billion in assets in nearly 5,900 accounts, according to SmartAsset.com.

R.M. Davis maintains that it cannot be held liable for the couple’s losses precisely because MacMillan admits that he lied and withheld information, and because there is no law that required the firm to protect the couple from third-party scammers.

“They never disclosed to RMD that they believed their Fidelity accounts had been compromised or that they planned to transfer their life savings to a cryptocurrency account,” the firm said in its response to the appeal. “The MacMillans intentionally misled RMD about their plans for their money when they directed RMD to liquidate their investment accounts.”

THE RED FLAGS

Experts say lying is common among fraud victims who have been groomed by scammers. Dubious reasons for sudden large withdrawals also are among the red flags for elder financial exploitation. Other signs include unexplained changes to accounts, wills or other personal documents and showing confusion, fear or secrecy about finances.

When Judge Thomas McKeon ruled in favor of R.M. Davis in Business and Consumer Court in October 2024, he concluded that the MacMillans had long relied on the firm for investment advice and fund management, “not to protect them from falling for a scam on their own computer.”

McKeon also found that, given the historical relationship between the firm and its clients, “it does not seem reasonable to impose on R.M. Davis a duty to delay clear instructions from a client in order to conduct some type of undefined investigation.”

Yet experts say that’s the intent of so-called “report-and-hold laws,” passed in Maine and 23 other states in recent years. They grant immunity from prosecution to trained investment advisers and broker-dealers if they suspect financial exploitation, report it to authorities and temporarily hold a transaction so it can be vetted.

Maine’s version, enacted in 2019, was expanded to include banks and credit unions in 2025. The federal Senior Safe Act of 2018, co-sponsored by Sen. Susan Collins, R-Maine, offers similar protections but doesn’t authorize transaction delays.

None of the laws mandates compliance.