SEC: 88% Less Would Make Hedge Fund Cut by Christopher Glynn, Reporter December 14, 2006 The number of households able to invest in hedge funds would be reduced by 88% should a proposed change to the accredited investor standard take effect, according to the SEC. Commissioner Paul Atkins said the SEC conducted research that showed just 1.29% of households in the country would meet the proposed criteria for hedge fund investing. The SEC made a proposal Wednesday that raised the minimum net worth needed to be a hedge fund investorâknown as the accredited investor standardâfrom $1 million to $2.5 million. The five-member SEC will next put the proposal, passed in a unanimous vote, out for a 60-day public comment period. The hedge fund industry has grown to its current sizeâ$1.786 trillion according to the HFN Asset Flow Reportâvia expanding from its original investor base of rich people and institutional clientele to include the more mainstream investor. â[A $2.5 million accredited investor standard] is a big hurdle for a lot of people,â said Ricardo Davidovich, a partner at Tannenbuam Helpern Syracuse & Hirschtritt, a law firm with a sizeable hedge fund practice. Robert Leonard, head of the New York hedge fund practice of law firm Bingham McCutchen, concurred, adding that the proposed increase would eliminate a lot of people who would otherwise seek to invest in the asset class.