ED freezes trading accounts in scam tied to social media
Last week, the ED’s Mumbai Zone conducted searches at 29 premises across six cities-Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar-under the Prevention of Money Laundering Act (PMLA). The case relates to R M Drip and Sprinklers Systems and R&B Denims, the agency said. According to the ED, the two companies issued more than 35 million shares and convertible warrants through preferential allotments between April 2023 and March 2024. A substantial portion of the funds allegedly came from a small network of connected individuals, firms and lenders, it said.
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The agency suspects that the shares were subsequently promoted through coordinated campaigns to drive up prices before preferential allottees sold part of their holdings.
The ED said in a press release that a large part of the money paid for these allotments came from a small circle of connected persons, firms and lenders. “Over the following months, the share prices were steadily pushed up, while the shares largely stayed in the same hands,” it said.
According to the agency, WhatsApp groups operating under names such as ‘Multibagger Stocks’ allegedly circulated daily buy recommendations to retail investors between late December 2025 and February this year. The groups were reportedly operated from Bhavnagar in Gujarat using SIM cards obtained in the names of other persons in Haryana and Mumbai. Promotions were also carried out through X, SMS and other channels.
The ED said that “it appears that the scrip of RMDSSL was promoted through various WhatsApp Groups to generate buying interest in the scrip”. “This resulted in significant increase in price and volumes of the scrip during the period when the scrip was getting promoted on WhatsApp groups. The Preferential allottees took advantage of this increased buying interest and dumped a part of their shareholding to large number of investors,” it added.
