The Enforcement Directorate (ED) has frozen Rs 200 crore in trading accounts belonging to two corporate entities as part of an investigation into an alleged stock market "pump and dump" manipulation scheme. The federal agency announced the move following a series of coordinated searches conducted on October 16 across multiple locations in India. The investigation is being carried out under the provisions of the Prevention of Money Laundering Act (PMLA).
The crackdown centers on Nashik-headquartered R M Drip and Sprinklers Systems Ltd. (RMDSSL) and Surat-based R&B Denims Ltd. According to the ED, these entities were subject to regulatory scrutiny following earlier interventions by the Securities and Exchange Board of India (SEBI). The agency noted that the investigation aims to unravel a complex web of financial transactions involving share allotments and artificial price inflation.
The searches conducted by the ED spanned 29 locations across Ahmedabad, Gandhinagar, Surat, Bhavnagar, Mumbai, and Nashik. Agency officials targeted the corporate offices of the two firms, the private residences of their promoters, and the premises of individuals who had been allotted company shares at significantly low prices. Additionally, the agency searched offices of stock broking and finance firms, along with locations associated with individuals suspected of orchestrating promotional activities on messaging platforms.
The ED's investigation report indicates that between April 2023 and March 2024, the two companies issued more than 3.5 crore shares and convertible warrants to a specific group of entities and individuals. Investigators discovered that the funding for these allotments originated from a concentrated circle of connected persons and lenders. The shareholdings remained largely within this same group while the stock prices were gradually increased.
The scheme allegedly relied heavily on social media to manipulate retail investor behavior. From December 2025 to February 2026, WhatsApp communities operating under names such as “Multibagger Stocks” circulated daily buy tips to the public. These messaging groups were reportedly operated from Bhavnagar, despite being registered using SIM cards obtained in the names of persons located in Haryana and Mumbai. By creating a buzz around the scrip, the perpetrators successfully lured a large number of buyers, which further drove up the trading price.
The agency’s statement clarified that the price and volume of RMDSSL shares increased significantly during the period they were being promoted in these WhatsApp groups. Taking advantage of this heightened market interest, the preferential allottees reportedly dumped a portion of their holdings onto unsuspecting retail investors, who had been drawn in by the unsolicited investment advice.
During the course of the investigation, the ED identified several clusters of beneficiaries linked by family ties, including entities such as Affluence Gems, Kawa HUF, and Komalay Consultancy. The freezing of the Rs 200 crore in trading accounts represents a significant step in the agency's effort to preserve the proceeds of the alleged crime. As the PMLA investigation continues, further scrutiny of the financial trails and the roles of the identified beneficiaries is expected. The ED has not yet announced further arrests, but the scope of the raids across six cities underscores the scale of the alleged market manipulation.
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