Retail investors duped as stock prices were pumped before lower‑circuit crash

In a sprawling fraud uncovered by the Enforcement Directorate, ordinary retail investors were lured into buying shares of RM Drip and Sprinkler Systems and R & B Denims Ltd. through aggressive price‑pump tactics. The ED’s coordinated searches across six cities seized computers, phones and other digital tools that were used to orchestrate the scheme.

Between April 2023 and March 2024, the two companies issued a massive block of shares and convertible warrants, amounting to more than 3.5 crore units, to a close‑knit circle of insiders and allied firms. The capital inflow was largely sourced from these same connected entities, creating a self‑reinforcing loop that kept the shares in the hands of the manipulators while the public price was artificially driven upward.

From late 2025 to early 2026, the fraudsters expanded the ruse by running WhatsApp groups titled “MultiBagger Stocks”. These groups, operating on SIM cards registered to unrelated individuals in Haryana and Mumbai but managed from Bhavnagar, sent daily buying cues to a growing army of retail traders. The number of participants ballooned from a few thousand to well over one hundred thousand.

When the groups were suddenly terminated on 25 February 2026, the artificial support vanished. The stocks slipped into a lower‑circuit, shedding about 70 percent of their value within a short span, leaving countless small investors with severe losses and shares that could no longer be liquidated.