The Enforcement Directorate (ED) conducted raids at a total of 29 locations across six cities in connection with a case related to alleged manipulation in the stock market and money laundering. The ED's Mumbai Zonal Office-I carried out this action on October 16, 2026, under the provisions of PMLA, 2002. This investigation is linked to alleged irregularities in the shares of two listed companies, M/s R M Drip and Sprinklers Systems Limited and M/s R&B Denims Limited.
According to the investigating agency, the probe focuses on various aspects such as share distribution, increase in their prices, and providing buying suggestions to investors through WhatsApp groups. ED teams conducted search operations in cities including Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat, and Bhavnagar. The locations raided included the offices of both companies as well as the residences of their promoters.
Additionally, the investigative agencies searched premises where individuals who acquired shares at low prices, as well as the offices of stockbroking and financial companies were located. They also scrutinized locations associated with those suspected of operating WhatsApp groups promoting the shares.
During the investigation, it was found that more than 3.5 crore shares and convertible warrants were issued during the period from April 2023 to March 2024. According to the ED, these shares and warrants were allotted to specific individuals and entities by both companies. The investigation also revealed that a large portion of the funds paid for these shares came from a limited group of interconnected individuals, firms, and lenders.
In the following months, the share prices of both companies continued to rise steadily, while most of the shares remained with the same people. According to the investigating agency, community groups named things like 'Multibagger Stocks' became active on WhatsApp from late December 2025 to mid-February 2026. Through these groups, advice to buy shares of both companies was sent daily.
Retail investors were attracted to buy shares through these messages. The ED's investigation uncovered that SIM cards in the names of other people in Haryana and Mumbai were used to operate these groups, although they were being run from Bhavnagar in Gujarat.
Following the advice to buy shares on the WhatsApp group, there was a rapid surge in the number of buyers for both companies' shares. According to ED data, the number of buyers in these shares increased from approximately 3,400 to over one lakh. Continuous buying messages were sent to investors through the WhatsApp group throughout this entire period.
However, these groups were suddenly removed on February 25, 2026. Immediately after this, the shares of both companies fell sharply and hit the lower circuit. Within a few days of the group removal, both shares registered a decline of approximately 70 percent.
According to the ED, this development resulted in a significant financial loss to over one lakh small investors. Many investors were left with shares that they could not sell. The investigating agency is thoroughly examining the link between the allotment of shares, the price increase, the operation of WhatsApp groups, and the losses incurred by the investors. During the raids, the ED seized several objectionable documents, digital devices, records related to share transactions, and property papers. The examination of these documents and electronic devices will provide detailed information about other aspects related to share transactions and alleged manipulation. Currently, the investigation into the matter is ongoing, and further action may be taken based on the agency's search and investigation findings.