ED Conducts Searches at 29 Premises in Six Cities in WhatsApp-Based Share Market Fraud Case
Mumbai, Oct 19 (TNT): The Directorate of Enforcement (ED), Mumbai Zonal Office-I, has conducted searches at 29 premises across six cities in connection with an alleged WhatsApp-based “pump and dump” stock market fraud involving two listed companies, R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd.
The searches were conducted on October 16 under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, in Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar, the Agency said in a release on Monday.
The premises covered the offices of the companies, residences of their promoters, persons who received shares at low prices, stockbroking and finance firms, and locations suspected of being used to operate promotional WhatsApp groups.
According to the ED, its investigation revealed that between April 2023 and March 2024, the two companies issued more than 3.5 crore shares and convertible warrants to selected persons and entities through preferential allotments.
A substantial portion of the money paid for these allotments allegedly came from a network of connected persons, firms and lenders.
Subsequently, the share prices were gradually pushed up while the holdings largely remained unchanged, the agency said.
The ED found that WhatsApp groups circulated stock-buying tips to retail investors between December 2025 and February 2026.
The groups, which operated under names such as “Multibagger Stocks,” allegedly issued daily buy recommendations to investors.
They used SIM cards obtained in the names of other persons in Haryana and Mumbai, but operated from Bhavnagar, Gujarat, according to the investigation.
The promotional campaign allegedly led to a sharp increase in buying interest in the two stocks and pushed up their prices.
The agency stated that the share price of R M Drip and Sprinklers Systems Ltd was subsequently promoted through various WhatsApp groups, generating buying interest before large shareholders allegedly sold part of their holdings to investors.
During the searches, the ED identified clusters of family-linked beneficiaries, including Affluence Gems and others, Kawa HUF and others, and Komalay Consultancy and others. These beneficiaries had allegedly acquired shares at low prices through preferential warrants, which were subsequently promoted through coordinated campaigns on WhatsApp, X, SMS and other channels.
The agency has frozen trading accounts worth approximately Rs. 200 crore belonging to the persons and entities allegedly connected with the scheme.
Various incriminating documents, digital devices, share transaction records and property documents were also seized during the searches.
Further investigation is underway, the ED added.
TNT KM
