The ED Freeze Came After Retail Bought the Dump

The Enforcement Directorate has frozen trading accounts worth about Rs 200 crore after searching 29 premises in a WhatsApp pump-and-dump probe. The searches ran on October 16 in Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar under the Prevention of Money Laundering Act, 2002.

The freeze, announced on October 19, sits on leftover accounts of connected holders. The cheap 2023-24 warrants had already been sold, the agency said, into a retail crowd built on daily buy tips.

The Freeze Landed After the Dump

Mumbai Zonal Office-I of the ED said the case centres on R M Drip and Sprinklers Systems Ltd, a Nashik micro-irrigation maker listed as RMDRIP, and R&B Denims Ltd, a Surat textile firm listed as RNBDENIMS. Officers searched company offices, promoter homes, residences of people allotted shares at low prices, broking and finance firms, and premises tied to promotional WhatsApp groups.

The agency has frozen trading accounts worth about Rs 200 crore, or 2 billion rupees, belonging to those persons and connected entities. Documents, digital devices, share records and property papers were seized. Further investigation is under progress, the statement said. No finding of guilt has been published.

ED, Mumbai has conducted search operations on 16.10.2026 at 29 premises in Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar under the PMLA, 2002 in connection with the WhatsApp-based "pump and dump" share manipulation scam involving R M Drip and Sprinklers Systems Ltd.… pic.twitter.com/6pT9xtuoPs

— ED (@dir_ed) October 19, 2026

Between April 2023 and March 2024, the two companies issued over 3.5 crore shares and convertible warrants to selected persons and entities. A large part of the money paid for those allotments came from a small circle of connected persons, firms and lenders, the ED said, and prices were then steadily pushed up while the stock largely stayed in the same hands.

Cheap Warrants at Rs 20.70 and Rs 32

The paper trail is in the companies’ own exchange filings, years before any raid. On March 14, 2023, R M Drip’s extra-ordinary general meeting in Nashik cleared up to 36,00,000 equity shares at Rs 20.70, aggregating Rs 7,45,20,000, and up to 1,58,10,000 fully convertible warrants at Rs 20.70, aggregating Rs 32,72,67,000. Face value was Rs 10, with a premium of Rs 10.70. Holders had 18 months to convert. Nivrutti Pandurang Kedar, DIN 06980548, signed the outcome as director and was appointed managing director the same day.

Warrants converted in tranches. On December 12, 2023, the board allotted 25,29,000 shares after taking the remaining 75 percent, Rs 15.525 a warrant, totalling Rs 3,92,62,725. On May 14, 2024, another 59,00,000 shares converted for Rs 9,15,97,500 on the same 75 percent balance. Filings tagged those allottees as non-promoter.

R&B Denims used the same tool at a different price. Its board on September 1, 2023, approved two crore warrants priced at Rs 32 each, face value Rs 2, aggregating Rs 64 crore, with 25 percent payable up front. Warrants were allotted on October 12, 2023, and converted on March 12, 2024, the company told BSE, with no deviation in use of proceeds. If fully converted, promoter holding would fall from 73.79 percent to 57.39 percent as public holding rose from 26.21 percent to 42.61 percent. Promoter headcount in shares was unchanged at 5,16,33,390; the new paper was public.

Both issues sat under Chapter V of the ICDR regulations, the SEBI rulebook for preferential allotments. Combined, the two books exceed 3.5 crore shares and warrants, which is the figure the ED used.

HOW THE TWO BOOKS WERE BUILT

The 2023 prices are not on today’s share. R M Drip later cut face value to Re 1 and, on April 13, 2026, allotted 17,84,28,571 bonus shares in a 5:7 ratio, taking paid-up capital to 42,82,28,571 shares. Comparing Rs 20.70 with Rs 19.67 as if they were the same unit would be a false read.

A Bhavnagar Group Called Multibagger Stocks

From the end of December 2025 to February 2026, WhatsApp communities with names such as Multibagger Stocks sent daily buy tips on these shares to retail investors, the ED said. The groups ran on SIM cards obtained in the names of other persons in Haryana and Mumbai, but were operated from Bhavnagar, Gujarat. Tips also ran on X, SMS and other channels.

Drawn in by the tips, the number of buyers in the two scrips rose many times over, which pushed prices up further, the agency said. Investigators put that jump at about 3,400 buyers to more than one lakh. The ED’s own wording on the dump is blunt.

The Preferential allottees took advantage of this increased buying interest and dumped a part of their shareholding to large number of investors.

Enforcement Directorate, Mumbai Zonal Office-I, statement dated October 19, 2026

Investigators said the WhatsApp groups were deleted on February 25, 2026, and that both stocks then hit the lower circuit. That date matches the tape on one of the two names. R&B Denims set its 52-week high of Rs 67.67 on February 25, 2026.

THE PAPER, THE TIPS, THE RAIDS

1. March 14, 2023: R M Drip shareholders clear the Rs 20.70 share and warrant issue in Nashik.
2. September 1, 2023: R&B Denims’ board clears two crore warrants at Rs 32.
3. October 12, 2023, to March 12, 2024: R&B allots the warrants, then converts them into equity.
4. December 12, 2023, and May 14, 2024: R M Drip converts warrant blocks into shares.
5. Late December 2025 to February 2026: Multibagger Stocks and similar groups send daily buy tips.
6. February 25, 2026: Investigators say the groups are deleted; R&B Denims prints its 52-week high.
7. April 22-23, 2026: SEBI searches promoter premises under Section 11C(9) of the SEBI Act, 1992.
8. October 16, 2026: ED searches 29 premises; trading accounts worth about Rs 200 crore are later frozen.

Retail buyers in that window were not hunting a hidden factory. They were the bid that let early allottees sell.

Family Clusters on the Allotment Lists

During the searches, the ED identified clusters of family-linked beneficiaries, including Affluence Gems and others, Kawa HUF and others, and Komalay Consultancy and others. Those beneficiaries had acquired shares of the targeted scrips at low prices through preferential warrants, the agency said.

R M Drip’s March 2023 warrant table already carries the Kawa names in the non-promoter column. Hitesh N Kawa was listed for 9,54,000 warrants, Hitesh N Kawa HUF for 5,00,000, Natwarlal K. Kawa HUF for 4,00,000, and Roopal H Kawa for 25,00,000. Natwarlal K. Kawa HUF also sat on the parallel equity list for 3,50,000 shares. Kunal Haresh Mehta was the largest warrant line at 36,00,000. Mukta Tukaram Kedar and Shaila Sakharam Kedar, sharing a surname with the managing director, each appeared for 10,74,000 warrants plus 4,50,000 equity shares. The filing does not spell out kinship, and the ED statement does not name the Kedars.

R&B Denims’ September 2023 annexure is a different cluster. Komalay Investrade Private Limited, a public body corporate, was listed for 20,00,000 warrants. Around it sat a Bhow-family block: Komal Malaykumar Bhow, Malay Rohitkumar Bhow, Nilaben Rohitkumar Bhow, Viral Malaybhai Bhow, Rohitkumar Shantilal Bhow, and three HUFs and an LLP, each for 10,00,000 warrants. Deven M Shah and Dhiren Mahendrakumar were listed for 40,00,000 each. Rajkumar Mangilal Borana, DIN 01091166, signed later warrant-proceeds filings as managing director from Surat. The ED named Komalay Consultancy; the listed vehicle is Komalay Investrade. The agency has not published a charge sheet tying those rows to the frozen accounts.

WHO THE FILINGS PUT ON THE CHEAP PAPER

• Kawa lines: Hitesh N Kawa, two Kawa HUFs and Roopal H Kawa on R M Drip’s 2023 warrant and share lists.
• Komalay and Bhow lines: Komalay Investrade plus a Bhow-family group on R&B Denims’ 2 crore warrant book.
• Largest single R M Drip warrant slice: Kunal Haresh Mehta, 36,00,000 warrants at Rs 20.70.
• What the ED added: Affluence Gems, which does not appear on the two warrant annexures opened for this report.

Preferential paper to a named public circle is legal if the ICDR process is followed. The allegation is what came next: a coordinated pump, then a sale into the tip-driven bid.

What the Two Stocks Trade at Now

R&B Denims closed at Rs 7.84 on October 19, 2026, against a 52-week high of Rs 67.67 set on February 25, 2026, and a 52-week low of Rs 7.72. That close is 88.4 percent below the high. Market value on that close was about Rs 212 crore. R M Drip closed at Rs 19.67 the same day, 72.7 percent below its 52-week high of Rs 72.17, after a session low matching the close; the 52-week low is Rs 14.81. Market value was about Rs 842 crore.

Both names still trade. Both still file results. The April 2026 company disclosures said SEBI’s searches had no material impact on financials or day-to-day operations. The ED case is about the paper, the tips and the alleged laundering of the gains, not a claim that the factories are fictitious.

A freeze of about Rs 200 crore on connected trading accounts does not, by itself, put money back into the demat accounts of late buyers. One question under the October 19 ED post asked whether victims may be compensated. The statement does not say.

SEBI Had Already Searched the Promoters

The money-laundering searches follow a market-regulator search in the same two names. R M Drip told exchanges that search proceedings at promoter-directors’ premises began at 7:45 AM on April 22, 2026, and ended at 2:00 AM on April 23, under an order of the Special Judge, SEBI, under Section 11C(9) of the SEBI Act, 1992. R&B Denims said searches covered its registered office, promoters’ premises and the CFO’s office, ending at 6:00 PM on April 23. Both companies said they had not been told of a specific violation and that operations were unaffected.

Nine days before those searches, R M Drip had allotted the 5:7 bonus. The ED statement does not discuss the bonus. SEBI has not published an order in this file.

WHAT WE KNOW

• The searches: ED searched 29 premises on October 16 and froze trading accounts worth about Rs 200 crore.
• The paper: Exchange filings show the Rs 20.70 and Rs 32 preferential warrant books in 2023-24.
• The tips: The ED says WhatsApp groups including Multibagger Stocks ran daily buy calls from late December 2025 to February 2026, operated from Bhavnagar on out-of-state SIMs.

WHAT IS UNCONFIRMED

• Guilt: No adjudication order or PMLA prosecution complaint has been published in this case.
• Restitution: The freeze is on connected trading accounts, not a stated payout plan for the wider buyer pool.
• Affluence Gems: Named by the ED, but not present on the two warrant annexures reviewed here.

The gap between a three-day SEBI search in April and an ED freeze in October is the period in which the alleged proceeds had to be traced as crime under PMLA, which needs a predicate offence. The agency has not named that predicate in the October 19 note.

Unsolicited Tips Keep Finding New Buyers

Nithin Kamath, founder of Zerodha, wrote on October 20 that the freeze should surprise nobody who has watched tip groups.

It’s crazy that even in 2026, people still fall for stock tips on WhatsApp, Telegram, SMS, and social media. This is probably the silliest way to lose money.

Nithin Kamath, founder of Zerodha, on X, October 20, 2026

He added that late-cycle markets produce more of these files, including influencers peddling IPOs and stocks, and that a message promising easy money should be treated as a warning. The louder structural point is narrower than that homily. A buyer who joins a Multibagger Stocks chat is not discovering a sleeper. That buyer is often the exit for people who received warrants at Rs 20.70 or Rs 32 while the float was still tightly held.

This raid is also one file. Tip groups on WhatsApp and Telegram are a standing trade, and a single PMLA search does not drain them. Brokers sit on the order tape that would show a thin SME name suddenly filling with first-time folios; that tape is what SEBI already uses when it does search a promoter house. In April 2025 the regulator issued a caution against WhatsApp trading groups that impersonate registered intermediaries and lure people into private chats with names such as VIP group. A 2020 caution had already covered unsolicited stock tips on WhatsApp, Telegram and bulk SMS. The group in this case was still called Multibagger Stocks.

R&B Denims now changes hands near Rs 7.84, a short walk from its 52-week low, eight months after the high printed on the day investigators say the chats vanished. R M Drip still has a market value near Rs 842 crore and a factory in Sinnar. The frozen Rs 200 crore is what the ED could still reach. The rest of the bid that met those warrant sales sits in more than one lakh retail folios, and that is the side of the trade the freeze does not reverse.

Disclaimer: This article is news reporting and analysis of an Enforcement Directorate investigation and of listed-company filings. It is informational only and is not investment advice, a recommendation to buy or sell any security, or a finding that any named person or company has committed an offence. Readers who hold or are considering these or other shares should consult a SEBI-registered investment adviser or other qualified professional before acting. Figures and case status reflect the ED statement dated October 19, 2026, company filings cited above, and market prices as of the October 19, 2026 close, and may change as the probe and the tape move.