Mumbai: The Enforcement Directorate (ED) on Friday conducted searches at 29 premises across six cities as part of a money laundering investigation into alleged stock manipulation and investment fraud involving two listed companies, R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd. The searches were carried out by the agency’s Mumbai Zonal Office-I under the Prevention of Money Laundering Act (PMLA).
Alleged Pump-And-Dump Scheme
The probe centres on suspected “pump-and-dump” activity, in which stock prices are allegedly inflated through coordinated trading, corporate actions and promotional campaigns before shares are sold at elevated prices. In the present case, the ED is investigating the alleged allotment of shares and convertible warrants to select individuals and entities, followed by an increase in the stocks’ prices and a WhatsApp campaign to attract retail investors. Both stocks subsequently crashed, leaving more than one lakh small investors facing substantial losses, according to the investigation.
The searches were conducted across Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar, covering the offices of the two companies, the residences of their promoters and individuals allegedly allotted shares at preferential prices, stockbroking and finance firms, and premises linked to those suspected of operating WhatsApp groups allegedly used to promote the stocks and attract retail investors.
Over 3.5 Crore Securities Issued
According to the ED’s investigation, the two companies issued more than 3.5 crore shares and convertible warrants between April 2023 and March 2024 to select individuals and entities. A substantial portion of the money used to subscribe to these securities allegedly came from a small, closely connected network of individuals, firms and lenders. The agency found that, over the following months, the market prices of the two stocks were allegedly pushed up while the shares largely remained with the same set of holders. The concentration of shareholding, the source of subscription funds and the subsequent price movements are key aspects of the alleged manipulation under investigation.
During the searches, the ED seized documents, digital devices, share transaction records and property-related papers suspected to be relevant to the investigation.
The investigation further revealed that between late December 2025 and February 2026, WhatsApp communities, including groups named “Multibagger Stocks”, which circulated daily-buy recommendations on the two stocks, allegedly attracting retail investors.The campaign allegedly drew retail investors into purchasing shares, contributing to a sharp rise in the number of buyers.
According to the ED, the SIM cards used by perpetrators to operate WhatsApp were found to be registered in the names of other individuals in Haryana and Mumbai but were allegedly run from Bhavnagar in Gujarat. Following the circulation of the recommendations, the number of buyers in the two stocks reportedly increased from around 3,400 to more than one lakh.
On February 25, 2026, the WhatsApp groups floated by the accused persons were abruptly deleted, following which both stocks hit their lower-circuit limits and shed around 70 per cent of their value within days. According to the ED’s investigation, the sharp plunge inflicted substantial losses on more than one lakh retail investors, many of whom were left unable to sell their holdings amid the steep decline in share prices.
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