Federal financial investigators have launched a massive nationwide crackdown in connection with alleged stock market manipulation and money laundering. The Enforcement Directorate, specifically its Mumbai Zonal Office-1, executed the operations under the provisions of the Prevention of Money Laundering Act 2002. The investigation centers around the suspicious share price movements of two listed companies, RM Drip and Sprinklers Systems Ltd and R&B Denims Ltd. Teams of investigators carried out coordinated searches simultaneously across six different cities spanning two states.
Simultaneous Raids Across Six Key Cities
The financial investigation agency targeted multiple locations spread across the states of Maharashtra and Gujarat. In Maharashtra, the searches covered several premises located within Mumbai and Nashik. Simultaneously, key commercial and urban centers in Gujarat were brought under the scanner, with extensive searches conducted across Ahmedabad, Surat, Gandhinagar, and Bhavnagar. During these sweeping operations, investigators gathered crucial financial documents and digital evidence concerning the day-to-day operations of both corporate entities.
The Mechanism Behind Artificial Price Inflation
Investigators discovered that between April 2023 and March 2024, both companies orchestrated a calculated scheme to issue massive quantities of shares and convertible warrants. Over this period, more than 3.5 crore shares and warrants were allotted to a select group of favored individuals and corporate entities. Crucially, the funds used to pay for these shares originated from a tight-knit circle of interconnected persons and associated firms. In the subsequent months, the market prices of both stocks were artificially driven upward while the vast majority of those shares remained concentrated in the hands of the original select beneficiaries rather than flowing into the public domain.
Luring Retail Investors Through WhatsApp Groups
The probe further revealed that between late December 2025 and February 2026, a network of community groups under the guise of multi-bagger stocks was systematically created. These WhatsApp channels were heavily utilized to broadcast daily trading tips and recommendations, enticing ordinary retail investors to purchase shares of the two targeted companies. To operate these groups anonymously, the masterminds used SIM cards procured in Haryana and Mumbai using identity documents belonging to other individuals. However, the entire operation and command center for these messaging groups was physically located in Bhavnagar, Gujarat. Influenced by these constant promotional messages, the buyer base for the stocks surged dramatically from just 3,400 to over one lakh participants.
Sudden Collapse and 70 Percent Crash
The scheme unraveled abruptly on February 25, 2026, when all the operating WhatsApp groups were suddenly deleted. The moment the communication channels went offline, the shares of both companies hit consecutive lower circuits. Within a matter of days, the stock values plummeted by roughly 70 percent. This steep and sudden downturn inflicted severe financial losses on more than one lakh small retail investors who found themselves trapped in un-tradable assets as selling orders could not be executed due to the locking of the lower circuits.
Seizures Made During the Nationwide Searches
During the course of the day-long raids, Enforcement Directorate teams searched the corporate offices of both firms as well as the residential premises of their promoters. In addition, inspections were carried out at the properties of individuals who had acquired shares at heavily discounted rates and various stock-broking entities. Investigators also scrutinized the premises linked to the operators who managed the promotional messaging groups. The coordinated crackdown yielded numerous suspicious physical documents, multiple digital devices, and comprehensive records of stock transactions. Authorities are continuing their deeper probe into the complex web of financial transactions and money laundering.
