The Enforcement Directorate (ED) has frozen trading accounts worth around ₹200 crore and seized documents and digital devices after conducting searches at 29 premises across six cities in an alleged WhatsApp-driven stock market manipulation case involving two listed companies.
The ED’s Mumbai Zonal Office-I conducted the searches in Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar on October 16.
This was done to investigate alleged manipulation of shares of R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd.
Offices of the two companies, residences of their promoters and preferential allottees, stockbroking and finance firms, and locations linked to people suspected of operating promotional WhatsApp groups were searched.
ED’s investigation found that the two companies issued more than 3.5 crore shares and convertible warrants to selected individuals and entities between April 2023 and March 2024.
A substantial portion of the funds used for these allotments allegedly came from a small network of connected individuals, firms and lenders.
The share prices were subsequently pushed up over several months, while the holdings largely remained within the same circle, the agency said.
WhatsApp tips allegedly fuelled buying
From late December 2025 to February 2026, WhatsApp communities with names such as “Multibagger Stocks” allegedly circulated daily buy recommendations for the two stocks to retail investors.
The groups reportedly operated using SIM cards registered in other people’s names in Haryana and Mumbai, but were run from Bhavnagar in Gujarat. The promotional campaign also used X (formerly Twitter), SMS and other channels, according to the ED.
The agency said the recommendations attracted a sharp increase in buyers, pushing up trading volumes and share prices. Preferential allottees then allegedly took advantage of the increased buying interest to sell part of their holdings to a large number of investors.
The ED identified clusters of family-linked beneficiaries, including Affluence Gems and others, Kawa HUF and others, and Komalay Consultancy and others. These beneficiaries had allegedly acquired shares at low prices through preferential warrants before the promotional campaign drove up buying interest.
The investigation is ongoing.
Nithin Kamath warns against stock tips on social media
Zerodha co-founder and CEO Nithin Kamath flagged the case on X on October 20, warning investors against relying on stock tips circulated through messaging platforms and social media.
Kamath urged investors to verify unsolicited investment recommendations rather than chase promises of easy money, adding that such messages could lead to significant losses.
“It’s crazy that even in 2026, people still fall for stock tips on WhatsApp, Telegram, SMS, and social media. This is probably the silliest way to lose money. Given how late in the cycle we are, these instances are only going to increase,” he wrote.
“We’re already seeing more pump and dumps, whether through WhatsApp groups or influencers peddling IPOs and stocks. This won’t end well,” he added.