The U.S. Securities and Exchange Commission said Monday it's keeping a close eye on the wild trading in meme stocks recently to ensure market stability.
"SEC staff continues to monitor the market in light of the ongoing volatility in certain stocks to determine if there have been any disruptions of the market, manipulative trading, or other misconduct," an SEC spokesperson told CNBC. "In addition, we will act to protect retail investors if violations of federal securities laws are found."
The comment came as retail trading exploded in a handful of speculative names, notably AMC Entertainment, BlackBerry, Bed Bath & Beyond and, to a lesser extent, GameStop. Retail investors kept piling into these names as they encouraged each other on social media platforms such as Twitter and Reddit's WallStreetBets forum.
During AMC's 83% advance last week, the stock was repeatedly the most active name on the Nasdaq. AMC has skyrocketed more than 100% this month alone in heavy trading after a 160% advance in May, pushing its 2021 rally to over 2,500%.
TD Ameritrade has taken action to increase margin requirements on AMC and GameStop to 100%, meaning investors are required to purchase all the securities with cash.
In January amid the historic short squeeze in GameStop, the SEC vowed to protect individual traders and to scrutinize actions taken by brokerages that may "disadvantage investors or otherwise unduly inhibit their ability to trade certain securities."
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