Six cities under ED scanner in Stock fraud investigation
New Delhi, October 16: The Enforcement Directorate (ED) on Friday raided 29 locations in six cities in connection with alleged share manipulation of listed companies. The investigation revealed that investors were repeatedly sent purchase messages through WhatsApp groups to buy shares of two companies. Subsequently, the share prices of both companies fell sharply, causing losses to over 100,000 small investors. During the raids, the ED seized transaction records, digital devices, documents, and property records.
The ED ‘s Mumbai Regional Office-1 conducted operations in Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat, and Bhavnagar under the Prevention of Money Laundering Act (PMLA), 2002. These raids were conducted in connection with the investigation into alleged share manipulation of RM Drip & Sprinklers Systems Limited and R&B Denims Limited. The scope of the searches included the offices of both companies, the residences of their promoters, the premises of those who received shares at low prices, the offices of stockbroking and financial companies, and the premises of those who allegedly ran WhatsApp groups for promotion.
According to the ED investigation, between April 2023 and March 2024, both companies issued over 35 million shares and convertible warrants to select individuals and entities. A large portion of the funds paid for these shares came from a group of interconnected individuals, companies, and lenders. In the following months, the share prices of both companies were continuously inflated, while the majority of the shares remained in the hands of a select few.
The investigation revealed that between late December 2025 and February 2026, WhatsApp groups with names like “Multibagger Stocks” featured daily stock buying advice. According to the ED, SIM cards obtained in the names of other individuals in Haryana and Mumbai were used to operate these groups, while the groups were operated from Bhavnagar, Gujarat.
Following these messages, the number of buyers of shares in both companies increased from approximately 3,400 to over 100,000. On February 25, the WhatsApp groups were abruptly removed. Subsequently, the shares of both companies hit lower circuits, and their prices fell by approximately 70% within a few days. This resulted in significant losses for over 100,000 small investors, leaving them stranded with shares that were difficult to sell.
During the searches, the ED seized documents related to the irregularities, digital devices, share transaction records, and property documents. Further investigation is ongoing.
