The Enforcement Directorate (ED) has initiated a probe into alleged stock price manipulation, conducting searches at 29 locations across six cities on Friday. This investigation is part of a money laundering case that reportedly affected over one lakh retail investors, who are now facing significant financial losses. The cities involved in the searches include Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat, and Bhavnagar, focusing on trading activities related to listed companies such as RM Drip and Sprinklers Systems and R&B Denims.

The searches targeted various premises, including the offices of the companies involved, residences of their promoters, and locations associated with individuals who allegedly received shares at reduced prices. Additionally, stockbroking and financial firms, along with individuals suspected of managing WhatsApp groups that disseminated trading advice, were also scrutinised during the operation.

During the searches, the ED reportedly seized a range of materials, including documents, digital devices, records of share transactions, and property papers. These actions were conducted under the Prevention of Money Laundering Act, and the agency has indicated that further investigations are ongoing.

Allegations of Share Price Manipulation

The ED claims that the two companies involved issued over 3.5 crore shares and convertible warrants to a select group of individuals and entities between April 2023 and March 2024. It is alleged that the funds used for these purchases originated from a limited circle of interconnected individuals, firms, and lenders. Following the issuance of these shares, the prices were reportedly inflated while the ownership largely remained within the same group of individuals.

From late December 2025 to February 2026, WhatsApp groups with names like “Multibagger Stocks” began to circulate daily recommendations, urging retail investors to purchase shares of the two companies. The ED’s investigation suggests that these groups utilised SIM cards registered under other individuals’ names in Haryana and Mumbai, although they were operated from Bhavnagar in Gujarat.

As a result of the tips provided by these WhatsApp communities, the number of investors buying the shares surged from approximately 3,400 to over one lakh. However, in February 2026, the WhatsApp groups were suddenly deleted, leading to a dramatic decline in share prices. Both stocks reportedly reached their lower circuit limits, suffering a loss of about 70 per cent of their value within a matter of days.

Impact on Retail Investors

The abrupt collapse in share prices has left more than one lakh small investors with substantial losses and shares that they are unable to sell. The ED’s investigation aims to uncover the full extent of the alleged manipulation and the roles played by various individuals and entities in this case. The agency is expected to continue its inquiries to determine the involvement of all parties linked to the stock manipulation scheme.

As the investigation unfolds, the ED will likely focus on tracing the funds involved and identifying any additional individuals or organisations that may have participated in the alleged scheme. The implications of this case could have far-reaching effects on investor confidence in the stock market, particularly among retail investors who may feel vulnerable to such manipulative practices.

The outcome of the ED’s investigation will be closely monitored by both investors and regulatory authorities, as it seeks to address the issues of transparency and accountability in the financial markets. The case highlights the need for stricter regulations to protect retail investors from potential fraud and manipulation in stock trading.

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