ED freezes Rs 200 crore in WhatsApp stock pump-and-dump probe

Searches conducted at 29 premises across six cities

The Enforcement Directorate’s Mumbai Zonal Office-I conducted searches at 29 premises across six cities on October 16 as part of its investigation under the Prevention of Money Laundering Act. The operation spanned locations in Maharashtra and Gujarat, specifically targeting Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat, and Bhavnagar.

These coordinated searches were carried out to gather evidence for the ongoing probe into the alleged stock manipulation scheme.

Investigation targets R M Drip and R&B Denims

The investigation focuses on alleged share price manipulation involving two listed companies, R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd. The probe centers on a scheme where stocks were promoted as potential multibaggers through WhatsApp groups to artificially inflate share prices.

This manipulation strategy allegedly misled retail investors by using coordinated campaigns to drive up the value of these specific listed shares.

Preferential allottees used coordinated campaigns to offload shares

Between April 2023 and March 2024, the two listed companies issued more than 3.5 crore shares and convertible warrants to selected individuals and entities. A substantial portion of the capital for these share allotments originated from a limited group of connected persons, firms, and lenders.

These preferential allottees acquired the shares at low prices before initiating coordinated promotional campaigns across WhatsApp, X, and SMS channels. The Enforcement Directorate alleges that these campaigns were designed to generate buying interest and drive up share prices.

While the share prices were pushed upward, a large proportion of the holdings remained within the same set of connected individuals. The promotional activity led to a sharp increase in buyers and trading volumes, which allowed the allottees to sell part of their holdings to a larger number of retail investors at increased prices.

This scheme, described by the Enforcement Directorate as a pump-and-dump operation, relied on coordinated efforts to inflate the value of the shares before offloading them to the public. The Free Press Journal reported that the strategy involved these specific steps to move shares from connected entities to retail buyers.

Bhavnagar-based operations used fake SIM cards for tips

From late December 2025 to February 2026, WhatsApp groups named Multibagger Stocks circulated daily buy recommendations to retail investors. These groups operated from Bhavnagar in Gujarat.

The operators used SIM cards registered in the names of other people in Haryana and Mumbai to send these messages. This promotional campaign coincided with a sharp rise in the number of buyers for the two stocks. The increased buying activity pushed the share prices higher.

ED identifies family-linked beneficiaries

The Enforcement Directorate conducted searches at 29 premises on October 16. These locations included company offices, residences of promoters, and offices of stockbroking and finance firms.

Investigators seized digital devices, property documents, and records of share transactions during the operation. The agency identified clusters of family-linked beneficiaries, including entities associated with Affluence Gems, Kawa HUF, and Komalay Consultancy.

These beneficiaries had allegedly acquired shares at low prices through preferential warrants. The search also covered premises linked to individuals suspected of operating the promotional WhatsApp groups.

Nithin Kamath urges investors to use AI to verify tips

Zerodha co-founder Nithin Kamath warned that pump-and-dump schemes are becoming more frequent through WhatsApp groups and influencers. He advised investors to verify stock tips received via social media or messaging apps with AI tools like ChatGPT or Claude.

Kamath said, "The next time you get a message promising easy money, just ask Claude or ChatGPT whether it's a good idea. It could save you a lot of money".