Just when you thought you had enough money to invest in a hedge fund the SEC raises the bar. Once again the not so rich guy is left to invest in crappy mutual funds. Class Discrimination or investor protection, you make the call! I, for one, am sick of the gov't making decisions for me. -Neo WASHINGTON, Dec 12 (Reuters) - The U.S. Securities and Exchange Commission said on Tuesday it is moving to increase the minimum net worth required for an investor to be eligible to invest in hedge funds to $2.5 million from $1 million. The five-member SEC is expected to vote on the proposal at an open meeting on Wednesday. SEC Chairman Christopher Cox told reporters at a briefing he expects approval to put the proposal out for public comment. Final action by the investor protection agency would come later. "We are going to be lifting the accredited investor standard from where it has been since 1982 at $1 million of net worth to $2.5 million," Cox said. The increase is approximately equal to an inflation adjustment from 1982 and also reflects "our sense of what matters and what is meaningful," Cox said. Free-wheeling and loosely policed, hedge funds have become a powerful market force. Their assets under management have doubled to more than $1.3 trillion over the past five years. As they have grown -- there are nearly 9,000 now -- hedge funds have expanded from their original client base of rich people and institutional investors to also take in money from the less well-to-do, raising government concerns about risk and suitability. The SEC's proposed rule, if adopted, would shut the door on a lot of the just-barely wealthy who have been piling into hedge funds lately, although one market analyst said it would likely not affect larger funds with big clients. "The impact is going to be on the smaller hedge funds," said Adam Sussman, senior analyst at TABB Group, which tracks the hedge fund industry. "People starting a hedge fund are going to have a harder time raising capital." The kinds of assets an investor could count toward meeting the $2.5 million cut-off would include securities in public companies and certain private companies, the SEC said. Real estate held for investment, as well as commodity interests, physical commodities and financial contracts held for investments could be counted. So could cash and cash equivalents, but not an investor's personal residence or place of business, the SEC said. The new proposed minimum net worth -- known as the accredited investor standard -- would be higher than the present standard, which varies depending on the investor. The base minimum is $1 million or $200,000 in net income for two consecutive years. The effective minimum net worth is already $1.5 million for hedge funds that charge performance fees, as most do. At the upcoming meeting, the SEC will also consider tightening up its anti-fraud rules as applied to hedge funds. "We're putting in place a sturdy anti-fraud rule that is tailor-made for hedge funds," Cox said.