So the regulators are rolling back Sarbanes-Oxley. What does that mean for investors long-term? And how much of of it should go?

These are some of the issues examined in this piece Will the SEC Embrace a Softer Sarbanes-Oxley.

The piece from the Knowledge@Wharton series doesn't actually come up with definitive answers but that's to be expected, no-one really knows. But it does look at some of the issues and the dilemma regulators face of both encouraging entrepreneurs and protecting investors. And it makes the point that finding the right mix is not going to be easy.

As Wharton management professor Martin Conyon says, there was a deep distrust of organisations when Sarbanes-Oxley was signed into law in 2002. Investors had lost a fortune, people had been put out of work and retirement incomes had been vaporized. But the world has since moved on and if the demand is no longer there, it might be time to scale the legislation back. The question is whether it's against investors' interests.

Of course, the fundamental problem with Sarbanes-Oxley is Section 404 which requires companies to check their internal controls and have those checks signed off by an external auditor. In the absence of clear guidelines on what executives needed to check, companies were often forced to go to outside auditors. The result: endless and unnecessary management checks that cost the companies a fortune.

On the other hand, proponents of Sarbanes-Oxley say Section 404 has resulted in greater transparency.

Critics however say the investors haven't been paying any attention and probably don't care. The Wharton piece quotes the co-chair of the SEC advisory committee Herbert Wander who noted that investors failed to provide any feedback on whether or not to modify Section 404.

"I frankly was disappointed by the lack of professional investor comments. There were a few, but not really very many. Perhaps that's a message that we should think about - that their lack of comments may mean something."

Actually, the only thing it means is that Section 404 is probably more relevant to the people paying the bills. With corporate governance, the usual rule is that investors don't speak up until things go wrong.

That's the risk the regulators are taking.