The Enforcement Directorate has frozen Rs 200 crore in assets related to suspected stock market manipulation involving R M Drip and Sprinklers Systems and R&B Denims. The probe highlights an alleged pump-and-dump scheme that reportedly used social media groups to inflate share prices, attracting over one lakh retail investors.
The Enforcement Directorate (ED) has taken significant action against suspected financial irregularities in the Indian equity markets, seizing assets and freezing trading accounts worth approximately Rs 200 crore. The investigation centers on alleged price manipulation involving two companies, R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd. This regulatory move follows coordinated searches conducted on October 16 across 29 locations, including cities such as Mumbai, Ahmedabad, Surat, and Bhavnagar.
Understanding the Alleged Pump-and-Dump Scheme
At the core of the investigation is an alleged pump-and-dump scheme. In such scenarios, promoters or connected entities often accumulate shares at low prices, often through preferential allotments. Between April 2023 and March 2024, investigators found that over 3.5 crore shares and convertible warrants were allotted to a cluster of linked firms, including entities named Affluence Gems, Kawa HUF, and Komalay Consultancy. By holding a large supply of these shares, the operators could allegedly control market liquidity and influence price movements.
To drive up the share prices, investigators believe the group used digital channels to create artificial demand. Between December 2025 and February 2026, social media accounts—often operating under names suggesting they offered expert financial advice or 'multibagger' stocks—regularly broadcast buy recommendations to unsuspecting retail investors. This digital strategy was highly effective, with the shareholder base of the involved companies rising from roughly 3,400 to over one lakh. This expansion in the investor base provided the necessary liquidity for the primary holders to sell their shares at inflated prices, leaving late-entry retail investors with potential losses.
Regulatory and Investor Context
This ED action is part of a broader regulatory crackdown involving the Securities and Exchange Board of India (SEBI). The market regulator had previously flagged irregularities regarding price inflation and coordinated trading patterns in these stocks, leading to searches at the premises of promoter-directors and associated merchant banking firms. The ED is now analyzing seized digital devices, transaction records, and property documents to track the movement of these illicit proceeds under the Prevention of Money Laundering Act.
For investors, this case highlights the risks associated with following unsolicited stock tips found on social media or messaging platforms. When stock prices rise sharply without clear business fundamentals, or when trading volumes are driven by social media hype, it often indicates a heightened risk of manipulation. Regulatory bodies continue to warn the public against acting on non-verified investment recommendations. The investigation remains ongoing, and the next steps will involve the scrutiny of transaction trails and the potential recovery of funds.