ED freezes trading accounts worth Rs 200 crore in WhatsApp stock-tip pump-and-dump case

The Enforcement Directorate (ED) has taken major action in a case of alleged "pump and dump" fraud in shares carried out through WhatsApp groups. Under the Prevention of Money Laundering Act, 2002, trading accounts worth about Rs 200 crore have been frozen. The accounts are linked to the individuals and entities concerned.

The ED's Mumbai Zonal Office-1 raided 29 locations in six cities: Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar. It is alleged that small investors were incited to buy shares through tips on "multibagger" stocks given in WhatsApp groups. The case concerns the shares of two listed companies.

The raids covered several kinds of premises. These include the offices of both companies, the homes of promoters, the homes of those who received shares at a low price, the offices of finance firms and the premises of suspects who ran promotional WhatsApp groups. The prices of the shares of "M/s R. M. Drip and Sprinklers Systems Limited" and "M/s R and B Denims Limited" are suspected to have been manipulated.

The investigation has found that between April 2023 and March 2024, these companies issued more than 3.5 crore shares and convertible warrants to select persons.

From the end of December 2025 to February 2026, tips to buy these shares were sent daily to small investors through WhatsApp communities. The groups were running on SIM cards registered to people in Haryana and Mumbai, while they were being operated from Bhavnagar. The share of "R. M. Drip" was heavily promoted, which pushed up trading volume. The ED alleges that the beneficiaries who had obtained "multibagger stocks" at a low price used this increased demand to sell their shares to ordinary investors.

During the raids, Affluence Gems, Kava HUF and Komle Consultancy have been identified as beneficiary groups. Digital devices and documents have been seized. News of Nashik figuring in the case has caused alarm among local investors there.

In a "pump and dump", some people buy shares at a low price and promote them on social media. When the price rises, they sell their shares and book a profit. The price then falls and ordinary investors suffer losses.

Investors should therefore not trust share tips received on WhatsApp or Telegram. They should be wary of messages claiming "multibagger" stocks or "guaranteed returns". They should check a company's financial health and, if they receive suspicious advice, complain to SEBI or the police.