WhatsApp multibagger stock tips, inflated share prices and investor losses: ED uncovers 'pump-and-dump' fraud
The probe agency conducted searches at 29 locations across six cities on October 16 as part of its investigation into the suspected pump-and-dump operation.
- Oct 19, 2026,
- Updated Oct 19, 2026 6:21 PM IST
The Enforcement Directorate (ED) has uncovered an alleged stock market manipulation scheme in which shares of two listed companies were pushed up through WhatsApp stock tips before being sold to retail investors at inflated prices.
The probe agency conducted searches at 29 locations across six cities on October 16 as part of its investigation into the suspected pump-and-dump operation.
In a statement issued on Monday, the ED said its Mumbai Zonal Office-I carried out searches in Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar under the Prevention of Money Laundering Act (PMLA), 2002.
The investigation centres on suspected manipulation of shares of two listed companies, R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd.
What is the alleged fraud?
According to the ED, the scheme began with preferential allotments of shares to a small group of connected individuals and entities.
Between April 2023 and March 2024, the two companies issued more than 3.5 crore shares and convertible warrants to selected persons and entities.
The agency alleged that a large portion of the money used for these allotments came from a small circle of connected individuals, firms and lenders.
Over the following months, share prices were steadily pushed higher, even though the shares largely remained in the same hands.
The investigation suggests that this created the groundwork for selling shares to retail investors once demand increased.
How WhatsApp groups were allegedly used
The next stage involved attracting retail investors through stock recommendations circulated on WhatsApp.
According to the statement, between the end of December 2025 and February 2026, WhatsApp groups with names such as "Multibagger Stocks" began sending daily buy recommendations for the two companies.
The groups allegedly operated using SIM cards obtained in the names of other individuals in Haryana and Mumbai, while the operators functioned from Bhavnagar, Gujarat.
As more investors followed these recommendations, the number of buyers in the two stocks increased many times over, pushing share prices higher.
The ED suspects that the WhatsApp campaign was used to generate artificial buying interest and create demand for shares already held by connected entities.
How did investors suffer losses?
The alleged scheme followed a pattern commonly known as pump-and-dump.
In such operations, a group holding shares attempts to increase their market price by generating buying interest. Once prices rise, the original holders sell their shares to new investors.
According to the ED, shares of R M Drip and Sprinklers Systems Ltd were promoted through several WhatsApp groups, resulting in a significant increase in prices and trading volumes.
When the stock was attracting buying interest, the operators allegedly sold part of their holdings to a large number of investors.
Retail investors who bought shares at inflated prices were exposed to losses when the artificial demand weakened.
The ED statement does not specify the total losses suffered by investors or the exact amount allegedly earned by the operators.
During the searches, the ED identified clusters of family-linked beneficiaries allegedly connected to the scheme. These included individuals and entities such as Affluence Gems and others, Kava HUF and others, and Komalay Consultancy and others.
According to the agency, these beneficiaries had acquired shares of the targeted companies at relatively low prices through preferential warrants. The shares were subsequently promoted through campaigns on WhatsApp, X, SMS, and other channels.
The searches covered the offices of the two companies, residences of promoters, premises of persons who received shares at low prices, offices of stockbroking and finance firms, and locations linked to suspected WhatsApp group operators.
The probe agency said it has frozen trading accounts worth approximately ₹200 crore belonging to the persons and connected entities under investigation. It also seized incriminating documents, digital devices, share transaction records and property-related documents during the searches.
The Enforcement Directorate (ED) has uncovered an alleged stock market manipulation scheme in which shares of two listed companies were pushed up through WhatsApp stock tips before being sold to retail investors at inflated prices.
The probe agency conducted searches at 29 locations across six cities on October 16 as part of its investigation into the suspected pump-and-dump operation.
In a statement issued on Monday, the ED said its Mumbai Zonal Office-I carried out searches in Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar under the Prevention of Money Laundering Act (PMLA), 2002.
The investigation centres on suspected manipulation of shares of two listed companies, R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd.
What is the alleged fraud?
According to the ED, the scheme began with preferential allotments of shares to a small group of connected individuals and entities.
Between April 2023 and March 2024, the two companies issued more than 3.5 crore shares and convertible warrants to selected persons and entities.
The agency alleged that a large portion of the money used for these allotments came from a small circle of connected individuals, firms and lenders.
Over the following months, share prices were steadily pushed higher, even though the shares largely remained in the same hands.
The investigation suggests that this created the groundwork for selling shares to retail investors once demand increased.
How WhatsApp groups were allegedly used
The next stage involved attracting retail investors through stock recommendations circulated on WhatsApp.
According to the statement, between the end of December 2025 and February 2026, WhatsApp groups with names such as "Multibagger Stocks" began sending daily buy recommendations for the two companies.
The groups allegedly operated using SIM cards obtained in the names of other individuals in Haryana and Mumbai, while the operators functioned from Bhavnagar, Gujarat.
As more investors followed these recommendations, the number of buyers in the two stocks increased many times over, pushing share prices higher.
The ED suspects that the WhatsApp campaign was used to generate artificial buying interest and create demand for shares already held by connected entities.
How did investors suffer losses?
The alleged scheme followed a pattern commonly known as pump-and-dump.
In such operations, a group holding shares attempts to increase their market price by generating buying interest. Once prices rise, the original holders sell their shares to new investors.
According to the ED, shares of R M Drip and Sprinklers Systems Ltd were promoted through several WhatsApp groups, resulting in a significant increase in prices and trading volumes.
When the stock was attracting buying interest, the operators allegedly sold part of their holdings to a large number of investors.
Retail investors who bought shares at inflated prices were exposed to losses when the artificial demand weakened.
The ED statement does not specify the total losses suffered by investors or the exact amount allegedly earned by the operators.
During the searches, the ED identified clusters of family-linked beneficiaries allegedly connected to the scheme. These included individuals and entities such as Affluence Gems and others, Kava HUF and others, and Komalay Consultancy and others.
According to the agency, these beneficiaries had acquired shares of the targeted companies at relatively low prices through preferential warrants. The shares were subsequently promoted through campaigns on WhatsApp, X, SMS, and other channels.
The searches covered the offices of the two companies, residences of promoters, premises of persons who received shares at low prices, offices of stockbroking and finance firms, and locations linked to suspected WhatsApp group operators.
The probe agency said it has frozen trading accounts worth approximately ₹200 crore belonging to the persons and connected entities under investigation. It also seized incriminating documents, digital devices, share transaction records and property-related documents during the searches.