Washington, Jan 30 (IANS): After online trading app Robinhood, co-founded by Indian American Baiju Bhatt, created a mayhem among the traders this week, the US Securities and Exchange Commission (SEC) has said it is closely monitoring and evaluating the extreme price volatility of certain stocks' trading prices over the past several days.

Although the FAA did not directly name Robinhood, GameStop and others, it acknowledged that extreme stock price volatility has the potential to expose investors to "rapid and severe losses and undermine market confidence".

Silicon Valley-based online trading app Robinhood had to raise emergency funding of $1 billion from its existing investors after demands on its cash skyrocketed amid "extraordinary circumstances" in the market.

Several traders slammed Robinhood, one of the largest online brokerage firms, for temporarily restricting buying of certain stocks including AMC Entertainment Holdings and GameStop this week.

Tesla CEO Elon Musk wrote in a tweet that he "absolutely" supports the call by Rep Alexandria Ocasio-Cortez (D-NY) for the House Financial Services Committee to launch an investigation into Robinhood for its stock trade restrictions.

Robinhood's move prevented investors from initiating new positions in shares of GameStop, AMC Entertainment Holdings, American Airlines, BlackBerry, Bed Bath & Beyond Inc., Express Inc., Nokia and Trivago, among others.

The company only allowed them to sell existing holdings. The company also raised margin requirements for certain securities.

Robinhood is one of the top platforms that made trading online easier as it also offers no-fee trading.

The US SEC said in a statement on Friday it will work to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate capital formation.

"The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities."

In May, Robinhood claimed to have 13 million users.

This week, in an apparent bid to to challenge Wall Street's dominance, a group of online investors bid up the price of stocks like GameStop, putting big-money hedge funds that had bet against the stocks in a spot.

"Amid this week's extraordinary circumstances in the market, we made a tough decision today to temporarily limit buying for certain securities," Robinhood had said in a blog post on Thursday.