In a speech to the Economic Club of New York last week, Paulson said U.S. regulators need to be aware of global competitiveness coming from growing markets such as London and Hong Kong.

Many argue that Sarbanes-Oxley costs, especially those associated with the internal controls requirement of Section 404, are deterring companies from listing on the American stock exchanges and diverting them to foreign exchanges.

"We need to implement the law in ways that better balance the benefits of the legislation with the very significant costs that it imposes, especially on small business," Paulson said.

He announced that the Bush administration will convene a conference next year to review the regulations governing the nation's financial markets.

"When it comes to regulation, balance is key," he said. "And striking the right balance requires us to consider the economic implications of our actions. Excessive regulation slows innovation, imposes needless costs on investors, and stifles competitiveness and job creation. At the same time, we should not engage in a regulatory race to the bottom, seeking to eliminate necessary safeguards for investors in a quest to reduce costs."

Securities and Exchange Commission Chairman Christopher Cox recently announced that U.S. regulators "will unveil significant changes" to the implementation of Section 404. "Those changes will be aimed at ensuring that the internal-control audit is top-down, risk-based and focused on what truly matters to the integrity of a company's financial statements," he said.