ED Raids 29 Locations Across Gujarat and Mumbai Over Alleged Stock Market Manipulation Scam
Summarized by AI; it may make mistakes. Check important info
Summarized by AI; it may make mistakes. Check important info
The Enforcement Directorate (ED) has conducted searches at 29 locations across Mumbai, Nashik and four Gujarat cities over an alleged money laundering scam involving the artificial inflation of shares in RM Drip and Sprinkler Systems Limited and R&B Denims Limited.
The searches covered Ahmedabad, Gandhinagar, Surat and Bhavnagar, where investigators suspect a network used WhatsApp groups to lure more than one lakh investors into buying the companies' shares by promoting them as potential multibaggers.
WhatsApp Groups Allegedly Used to Lure Investors
According to the investigation, WhatsApp groups operated from Bhavnagar circulated stock tips encouraging retail investors to purchase shares of the two companies. The groups reportedly used SIM cards registered in the names of other individuals in Haryana and Mumbai.
The number of people targeted through these groups allegedly grew from more than 3,400 to over one lakh. Investors were encouraged to buy the shares based on claims that their prices would rise substantially.
The groups reportedly circulated stock recommendations from late December 2025 until February 2026.
Share Prices Fell 70% After WhatsApp Groups Were Deleted
Investigators found that the share prices continued to rise after the companies issued more than 3.5 crore shares and convertible warrants to certain individuals and institutions in March 2024.
According to the allegations, a relatively small group of related individuals, companies and lenders provided much of the funding used to acquire these securities, resulting in concentrated shareholdings.
On 20 February 2026, the WhatsApp groups were allegedly deleted suddenly. The shares subsequently hit lower circuits, with their prices falling by around 70% within days.
The sharp decline reportedly left more than one lakh small investors facing substantial losses, with many unable to sell their holdings as the shares continued to fall.
ED Searches Promoters, Brokers and Suspected Group Operators
During the searches, ED teams covered the residences of company promoters, individuals who had acquired shares at low prices, offices of stockbroking and finance companies, and properties linked to suspected operators of the WhatsApp groups.
Investigators seized documents, digital devices, share transaction records and property papers as part of the operation.
The agency is examining the alleged stock price manipulation, the movement of funds and the possible proceeds of crime under the Prevention of Money Laundering Act.
The investigation will seek to establish how the share prices were allegedly inflated, who benefited from the transactions and the extent of losses suffered by retail investors. The allegations remain subject to investigation.
