ED Raids 29 Locations Over 200-Crore ‘Pump and Dump’ Fraud in Two Listed Shares
The Enforcement Directorate (ED) has unmasked an organized stock market manipulation network following coordinated search operations across 29 locations in six commercial cities across Maharashtra and Gujarat. Conducted under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, by the agency’s Mumbai Zonal Office-I on October 16, 2026, the sweeping crackdown targeted an intricate "pump and dump" financial conspiracy involving the artificially inflated shares of two publicly traded companies—RM Drip and Sprinklers Systems Limited and R&B Denims Limited. The simultaneous raids covered corporate headquarters, promoter residences, premises of early warrant recipients, equity broking offices, and digital marketing operators across Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat, and Bhavnagar, uncovering how clandestine social media channels were leveraged to mislead retail investors and engineer multi-crore illicit gains.
Preferential Allotments and Fake WhatsApp Tips: The Anatomy of the Market Rigging
According to investigative findings released by the agency, the fraudulent architecture was established between April 2023 and March 2024, during which both companies issued more than 35 million shares and convertible warrants to a handpicked circle of entities at steeply discounted valuations. The funds routed to secure these initial allotments originated from an interconnected web of associated entities, non-banking financiers, and promoters who maintained concentrated custody of the floating supply to avoid open-market price discovery. Once the shares were locked within friendly hands, the operators launched an aggressive retail-entrapment drive between late December 2025 and February 2026. Fraudulent WhatsApp trading channels bearing deceptive names such as "Multibagger Stocks" began broadcasting unsolicited daily buy recommendations. Operating from Bhavnagar, Gujarat, using burner SIM cards procured under fraudulent identities in Haryana and Mumbai, the syndicate triggered an artificial wave of retail FOMO (fear of missing out), creating massive counterparty liquidity that allowed early warrant holders to offload their holdings at peak valuations and trap unsuspecting public buyers at the top of the price cycle.
Coordinated Crackdown: ₹200-Crore Trading Accounts Frozen and Key Beneficiaries Exposed
The targeted market manipulation resulted in abnormal surges in trading volumes and share valuations for RM Drip and Sprinklers Systems and R&B Denims, paving the way for systematic dumping by core conspirators. Search teams identified several beneficiary family syndicates and proxy corporate entities, including individuals linked to Affluence Gems, Kawa HUF, and Komalay Consultancy, who acquired large equity blocks through preferential warrants before offloading them through social media hype. Exercising statutory powers under anti-money laundering frameworks, the ED has frozen active trading and demat accounts with an aggregate holding value of approximately ₹200 crore. Additionally, investigators seized a substantial cache of digital storage drives, mobile phones, insider share transaction ledgers, and incriminating property documents, with forensic analysis underway to trace the illicit proceeds and establish broader regulatory violations in coordination with capital market watchdogs.
