Cheap shares, WhatsApp tips, then a crash: ED probes stock manipulation case

The Enforcement Directorate (ED) on Friday searched 29 premises across six cities in a money laundering probe into alleged share price manipulation that left more than one lakh retail investors facing heavy losses.The searches in Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar were linked to trading in shares of listed companies, including RM Drip and Sprinklers Systems and R&B Denims.Friday’s searches covered the companies’ offices, their promoters’ residences and premises linked to people who received shares at low prices. Stockbroking and finance firms, along with people suspected of running the WhatsApp groups, were also searched.The agency said it seized documents, digital devices, share transaction records and property papers during the searches conducted under the Prevention of Money Laundering Act. Further investigation is underway. According to the ED, the two companies issued over 3.5 crore shares and convertible warrants to selected individuals and entities between April 2023 and March 2024. Much of the money used to buy them came from a small circle of connected individuals, firms and lenders.Over the following months, the share prices were allegedly pushed up while the holdings largely remained within the same group. From late December 2025 to February 2026, WhatsApp communities with names such as “Multibagger Stocks” began sending daily recommendations urging retail investors to buy these shares, the agency said.The groups allegedly used SIM cards obtained in other people’s names in Haryana and Mumbai but were operated from Bhavnagar in Gujarat. As investors followed the tips, the number of buyers in the two stocks rose from about 3,400 to more than one lakh.The WhatsApp groups were abruptly deleted in February 2026. Both stocks then hit their lower circuit limits and lost about 70 per cent of their value within days, the ED said. More than one lakh small investors were left with heavy losses and shares they could not sell.- Ends