WASHINGTON (Reuters) — The minimum net worth an investor must possess to be allowed to invest in hedge funds would more than double to $2.5 million in investments, excluding a personal residence, under a measure proposed by the U.S. Securities and Exchange Commission yesterday.In a 5-0 vote at a meeting, the SEC proposed raising the “accredited investor standard” for hedge funds <\m> loosely policed capital pools that have doubled their assets under management to more than $1.3 trillion in the last five years.

The investor standard has been held at $1 million since 1982. The proposed increase is approximately equal to an inflation adjustment.

As hedge funds have grown —there are nearly 9,000 now — they have expanded from their initial client base of the rich and institutions to take in money from the less well-to-do, raising government concerns about risk and suitability.

“What we’re dealing with today is the potential problem of retailisation” of hedge funds,” SEC Chairman Christopher Cox told reporters during a break in the commission’s meeting.

The SEC’s proposed rule, if adopted, would shut the door on the just-barely wealthy investors who have been piling into hedge funds lately, despite the risks and high costs.

SEC Commissioner Paul Atkins said, “It is no secret that hedge funds are risky, that they charge high management fees.”