Full Breakdown
Enforcement Directorate raids 29 premises in six cities over alleged Rs 200 crore pump-and-dump scheme
By Drooid · · How we work
Core Event: Multi-city raids and account freezes
On October 16, the Enforcement Directorate’s Mumbai Zonal Office-I searched 29 premises in Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar under the Prevention of Money Laundering Act. The raids targeted company offices, promoters’ residences, allotment-recipient locations, stock-broking firms and sites linked to promotional WhatsApp groups. The agency froze trading accounts worth roughly INR200 crore belonging to persons and entities it says are connected to the alleged manipulation of shares of R M Drip and Sprinklers Systems Ltd and R & B Denims Ltd. Documents, digital devices, share-transaction records and property papers were seized.
Background & Context
The ED action follows a crackdown by the Securities and Exchange Board of India (SEBI). SEBI officials had conducted searches at the premises of promoter-directors of the two companies on April 27, seizing documents and digital evidence as part of a probe into suspected pump-and-dump activity. Both regulators are investigating whether coordinated trading and corporate announcements artificially inflated the stock prices before insiders sold their holdings.
How the alleged scheme operated
According to the ED, between April 2023 and March 2024 the two companies issued more than 3.5 crore shares and convertible warrants to a select group of individuals and entities. A large portion of the money paid for these allotments came from a small circle of connected persons, firms and lenders.
From December 2025 to February 2026, WhatsApp groups—most notably “Multibagger Stocks”—circulated daily “buy” recommendations for the two stocks. The groups operated from Bhavnagar but used SIM cards registered in Haryana and Mumbai. The campaign, supplemented by messages on X and SMS, expanded the investor base from roughly 3,400 to over one lakh.
The ED alleges that the preferential allotment holders leveraged the surge in buying interest to dump a portion of their shareholdings, driving prices higher. On February 25 2026, the WhatsApp groups were deleted, after which the shares fell to the lower circuit and lost about 70 percent of their value within days, leaving many small investors with heavy losses.
Data & Statistics
- INR200 crore in trading accounts frozen.
- >3.5 crore shares and convertible warrants issued (April 2023 – March 2024).
- Investor count rose from ?3,400 to >100,000 after the WhatsApp campaign.
- Share prices dropped ?70 % after the groups were deleted on February 25 2026.
Official Statements & Responses
The ED described the investigation as uncovering a systematic scheme that used preferential allotments and coordinated online promotion to manipulate share prices. It said the seized material will be examined for money-laundering violations.
SEBI indicated its own investigation remains ongoing, with officials continuing to examine the alleged manipulation and the role of the promotional messaging groups. No final conclusions have been announced.
Conflicting Reports & Gaps
While sources agree on the scale of the account freeze and the rise in investor numbers, the precise monetary losses suffered by retail investors have not been disclosed. The ED’s statement does not quantify the gains allegedly realized by the preferential allotment holders, and no independent audit of the transactions has been reported.
What’s Next
The ED has said the probe is continuing, but no specific future hearings, deadlines or additional enforcement actions have been announced. Both the ED and SEBI are expected to pursue further investigative steps as they analyze the seized evidence.