The Enforcement Directorate (ED) searched 29 premises across Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar after more than one lakh investors suffered heavy losses in two stocks promoted through WhatsApp groups, according to an official cited by The Indian Express. The searches were conducted under the Prevention of Money Laundering Act, 2002, and targeted the companies, their promoters, intermediaries and people suspected of running the promotional groups.
The investigation identified alleged manipulation involving listed companies M/s R M Drip and Sprinklers Systems Ltd and M/s R&B Denims Ltd. The premises searched included the offices of the two companies, residences of their promoters, people who received shares at low prices, stock-broking and finance firms, and locations linked to the operation of the WhatsApp groups.
According to the ED’s investigation, the two companies issued more than 3.5 crore shares and convertible warrants between April 2023 and March 2024 to selected persons and entities. A significant portion of the money used to pay for those allotments came from a small group of connected persons, firms and lenders, the agency said.
The investigation further found that the share prices were subsequently pushed up over several months while the shares largely remained within the same circle of holders. Between the end of December 2025 and February 2026, WhatsApp communities using names such as “Multibagger Stocks” reportedly sent daily buy recommendations to retail investors.
The groups were run using SIM cards obtained in the names of other people in Haryana and Mumbai, but were allegedly operated from Bhavnagar in Gujarat. The number of buyers in the two stocks rose from about 3,400 to more than one lakh after investors followed the messages, the official said.
The WhatsApp groups were suddenly deleted on February 25, triggering a sharp fall in the share prices. The two stocks lost about 70 per cent of their value within days, leaving more than one lakh small investors with substantial losses and holdings they were unable to sell, according to the report.
During the searches, the ED seized documents, digital devices, share-transaction records and property papers described as incriminating material. The agency’s further investigation is in progress.
