The Enforcement Directorate has frozen trading accounts worth approximately ₹200 crore following coordinated searches across six cities in connection with an alleged stock market manipulation operation conducted through messaging apps. Officers from the agency’s Mumbai Zonal Office-I carried out search operations on October 16 at 29 locations across Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat, and Bhavnagar. The investigation targets a suspected pump-and-dump scheme involving the shares of two listed firms, R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd. Investigators seized various financial documents and digital devices from corporate offices, residences of company promoters, preferential allottees, stockbroking firms, and individuals tied to promotional social media groups.
Preferential Allotments Funneled Through Connected Entities
The federal probe revealed that both listed companies issued more than 3.5 crore shares and convertible warrants to designated individuals and corporate entities through preferential allotments between April 2023 and March 2024. Investigators suspect that a substantial portion of the capital utilized to fund these acquisitions originated from a concentrated network of interconnected lenders, businesses, and individuals. Over subsequent months, the market prices of the two stocks were steadily driven upward, while the core volume of holdings remained closely circulated within this specific group of connected participants.
The agency is examining the direct financial relationships linking the allotment funding to subsequent market transactions. Officials are working to determine whether the preferential issuances, complex financing channels, and planned market entries were deliberately coordinated to fabricate artificial trading volume and drive price appreciation for internal profit.
Social Media Groups Used to Attract Retail Buyers
According to the Enforcement Directorate, the market surge was supported by targeted digital campaigns. Promotional channels, including WhatsApp groups operating under labels such as Multibagger Stocks, routinely distributed stock tips and buying advice between late December 2025 and February 2026. These messages urged retail participants to buy shares in the two firms, producing sudden increases in demand, trade volumes, and share values. The marketing push was amplified through text messages, other messaging channels, and posts on X.
Investigators discovered that the administrators running the messaging networks operated from Bhavnagar in Gujarat, using SIM cards registered under fraudulent identities in Mumbai and Haryana. The agency suspects that once broader investor demand was generated through these channels, select preferential allottees who had secured shares at discounted rates systematically offloaded portions of their portfolios into the market. Officials are currently assessing the extent of financial losses incurred by unsuspecting retail investors who bought at inflated valuations.
Beneficiary Syndicates Under Scrutiny Following Industry Warnings
The ongoing investigation has identified multiple groups of primary beneficiaries, including Affluence Gems and associated entities, Kawa HUF and connected parties, and Komalay Consultancy alongside its associates. Members of these entities secured significant equity holdings through low-cost preferential warrants before the online promotional push elevated public demand. The agency is analyzing financial records to establish the ultimate beneficiaries, trace capital sources, and identify business associations between the warrant recipients and those managing the promotional messaging network.
Following the agency’s enforcement actions, Zerodha co-founder and Chief Executive Officer Nithin Kamath issued a public warning on October 20 advising market participants against following unverified recommendations on WhatsApp, Telegram, and other social platforms. He stressed that manipulative schemes driven by social media channels and unverified stock advice expose retail investors to heavy capital losses when prices collapse after insiders exit. The Enforcement Directorate’s investigation remains active as authorities examine seized digital records and transaction histories to establish full liability.
Follow for daily updates on cybercrime, corporate fraud, DFIR, hacking, investigations, and digital forensics
