Wall Street is “losing its leading competitive position” compared to financial centers in other countries, and the federal government must take steps to curb lawsuits and overhaul market regulations to improve New York’s standing, a report to be released today by a blue-ribbon committee of business leaders and academics says.

The report from the bipartisan Committee on Capital Markets Regulation appears to be the most comprehensive study to date on how America needs to reposition itself as cities such as London and Hong Kong gain ground.

“The evidence presented here suggests that the United States is losing its leading competitive position as compared to stock markets and financial centers abroad,” the 152-page document says. “A key measure of competitiveness, one particularly relevant to the growth of new jobs, is where new equity capital is being raised.”

The private committee found that in the first nine months of 2006, 11 American companies opted to list on the London Stock Exchange instead of going public in New York. Those companies raised about $800 million that would have otherwise been raised here.

That, coupled with the fact London has snared 25% of the global pie for initial public offerings from the 5% it commanded three years ago, highlights a trend that Mayor Bloomberg, Senator Schumer, and others have already sounded the alarm about.

The 22-member task force — which is being spearheaded by the dean of Columbia University’s Business School, Glenn Hubbard; a Harvard law professor, Hal Scott, and the chairman of the Brookings Institution, John Thornton, who is a former president of Goldman Sachs — said solving the “problem of the U.S. capital markets” will take reducing the burdens of lawsuits and regulation and boosting shareholders’ rights.

The body recommended an extensive and far-reaching set of actions — such as improving cost-benefit analysis by the Securities and Exchange Commission, allowing shareholders to vote on takeover defenses, and having the Department of Justice revise its prosecutorial guidelines. It also says that criminal prosecution of corporations should be only a last resort.

Created in September, the committee and its mission have been praised by the Treasury secretary, Henry Paulson Jr. According to news reports, Mr. Paulson has questioned whether regulations here are driving companies away.

The body does not advocate for extensive changes to the Sarbanes-Oxley Act, the controversial post-Enron regulatory law, but says the federal government should consider exempting small companies from the much-discussed Section 404 of the law because they are getting crushed with the expense of complying.

According to the report the average cost for a company to implement Section 404, which requires company’s to conduct extensive internal audits, for the first time was $4.26 million in 2004. The Section 404 issue has already been taken up in Washington, where Rep. Gregory Meeks, a Democrat of Queens, is co-sponsoring a bill that would exempt companies with a market value of less than $700 million and meet other requirements.

Senator Sarbanes of Maryland and Rep. Michael Oxley of Ohio, the namesakes of the original post-Enron legislation, are both retiring from Congress next month, leaving a possible opening for amendments.

The committee also notes that more companies are “going private”— a signals the “regulatory and liability costs and burdens,”are on the rise. In fact, while foreign companies are tapping into America’s wealth they are doing so increasingly through private, not public, markets.

“For much of the 60 years since World War II firms raising capital did not so much choose to come to the United States, they came naturally,” the committee wrote. “Today the forces at work are increasingly different. Firms must choose to come to the United States to raise capital: they do not have to come.”

Last month, Messrs. Bloomberg and Schumer co-authored an opinion piece in the Wall Street Journal which said “unless we improve our corporate climate, we risk allowing New York to lose its preeminence in the global financial sector.”

The director of the Center on Corporate Governance at Columbia University’s Law School, John Coffee, said the dramatic decrease in IPOs in American markets can’t be blamed on Sarbanes-Oxley because the trend started in 2001, several years before the law was passed. He attributed it to a number of other factors, including the “hyper litigation environment,” and said it will create economic problems if nothing is changed.

“This is the leading industry in New York. It’s an industry that thrives on transactions and if more of those transactions move off shore, New York’s economy will suffer,” said Mr. Coffee, who served as a consultant to the committee. “This is a story that New York should be closely watching.” Indeed, the city’s Economic Development Corporation has commissioned its own report from McKinsey & Company, a consultant it hired for $600,000 to come up with recommendations for improving New York’s competitive edge. A spokesman for Mr. Bloomberg, Stuart Loeser, said yesterday that the report would be complete by the end of the year.

The chairman of the New York Stock Exchange, Marshall Carter, told a congressional committee earlier this year that the American market “remains the market of choice.” But, he said, the loss of competitiveness is “real and growing.”

At a real estate conference in Manhattan yesterday, one of the city’s most prominent developers, Stephen Ross of the Related Companies, said that Sarbanes-Oxley threatened to push companies abroad and effectively weaken New York’s booming real estate industry.

While the findings could provide an important roadmap as the Bush administration mulls over securities industry reforms, none of its recommendations are binding.

The Financial Times reported this week that Governor-elect Spitzer “pronounced himself suspicious of the push to revamp the Sarbanes-Oxley corporate accountability rules.” Mr. Spitzer was also quoted as saying, “I’ll work to make sure the financial companies stay here,” adding, “We’re going to look at the tax code to make sure we’re not pushing capital elsewhere.”