PNN_201401_Design Professionals and the Dodd-Frank ActThe following is the introduction to Design Professionals and the Dodd-Frank Act, the January 2014 issue of ProNetwork News:

On September 18, 2013, the Securities and Exchange Commission adopted the final rule under the Dodd-Frank Act regarding the registration of municipal advisors. The new rules were published in the Federal Register and became effective on November 20, 2013. This article will provide a general discussion of how the Dodd-Frank Act and the final rules may impact engineers and other design professionals providing services to non-federal governmental clients. You should seek legal advice for your specific situation as this article only provides general information and is not intended to provide legal advice or interpretation of the Act for particular situations.

“Engineers providing engineering services” are specifically excluded from the statutory definition of “municipal advisor” set forth in the Dodd-Frank Act.1 As such, engineers do not need to be registered as municipal advisors provided that they are not giving advice or making recommendations regarding municipal financial products or the issuance of municipal securities. Unfortunately the Act provides no clear line of demarcation of when an engineer’s advice or recommendation falls outside of the “engineering services” exclusion. The final rule does provide some guidance as to the scope of the engineering services exclusion. Unfortunately, the exact location of the line separating permitted engineering advice from advice requiring the engineer to be a registered advisor remains blurred.2 We suspect it will take several years before enough real world situations are evaluated by the SEC to provide effective guidance of how the SEC will interpret the statutory engineering exclusion. Unfortunately, this clarity will likely develop through the court system as suits are filed alleging that engineers crossed the line into giving prohibited advice on projects where the revenue streams or operating costs do not match the projections. Consequently, until the line is clarified, we recommend a cautious and conservative approach. Continue reading “Design Professionals and the Dodd-Frank Act”