ED Searches 29 Premises In Six Cities Over Alleged Stock Manipulation, Investment Fraud
Mumbai: The Enforcement Directorate (ED) on Friday conducted searches at 29 premises across six cities as part of a money laundering investigation into alleged stock manipulation and investment fraud involving two listed companies, R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd. The searches were carried out by the agency’s Mumbai Zonal Office-I under the Prevention of Money Laundering…
The Enforcement Directorate (ED) conducted searches at 29 locations across six cities, including Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat, and Bhavnagar, as part of an investigation into alleged stock manipulation and investment fraud involving R M Drip and Sprinklers Systems Ltd, as well as R&B Denims Ltd. The probe centers on a suspected "pump-and-dump" scheme, where stock prices were allegedly inflated through coordinated trading, corporate actions, and promotional campaigns before shares were sold at elevated prices.
The ED found that the two companies issued over 3.5 crore shares and convertible warrants between April 2023 and March 2024, with a significant portion of the funds allegedly sourced from a close-knit network of individuals, firms, and lenders. Over the next few months, the market prices of the stocks were allegedly pushed up while the shares remained with the same set of holders.
The investigation uncovered WhatsApp communities promoting the stocks and attracting retail investors, which allegedly led to a sharp increase in the number of buyers, from around 3,400 to more than one lakh. Following the circulation of buy recommendations, both stocks crashed, resulting in substantial losses for over one lakh retail investors.
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