Imagine joining a WhatsApp group promising the next multibagger stock, watching its price rise, and then seeing that stock collapse after the group suddenly disappears.

That is the disturbing pattern investigators are examining in the R&B Denims and R M Drip case.

The Enforcement Directorate has frozen trading accounts holding approximately ₹200 crore as part of an investigation into suspected stock price manipulation involving two listed companies.

The companies under investigation are R&B Denims Limited and R M Drip and Sprinklers Systems Limited. On October 16, 2026, the ED conducted searches at 29 premises across six cities in Maharashtra and Gujarat.

The searches covered Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar. Investigators examined company offices, promoters’ residences, stockbroking firms, financing entities and individuals suspected of operating promotional WhatsApp groups.

The operation was conducted under the Prevention of Money Laundering Act, following an earlier investigation by the Securities and Exchange Board of India.

According to investigators, the suspected manipulation began well before the dramatic movements in the two companies’ share prices.

Between April 2023 and March 2024, more than 3.5 crore shares and convertible warrants were preferentially allotted to selected individuals and entities.

The ED suspects that significant portions of the funding originated from a relatively small network of connected parties.

Preferential allotments are legitimate financing arrangements when conducted according to applicable regulations. The concern in this case is the alleged relationship between the allotments, connected investors and subsequent market activity.

Investigators believe shares remained concentrated among related entities while market prices were allegedly pushed higher.

The next stage reportedly involved aggressive promotion through WhatsApp groups presenting the companies as potential multibagger investments.

Groups carrying names such as Multibagger Stocks allegedly circulated repeated buying recommendations between December 2025 and February 2026.

The messages encouraged retail investors to purchase shares while highlighting expectations of substantial price appreciation.

The ED alleges that some of the groups were operated from Bhavnagar using SIM cards registered in other individuals’ names.

That detail is significant because investigators are examining whether the operators deliberately concealed their identities while coordinating promotional activity.

As the recommendations circulated, the number of investors in the two companies reportedly increased from approximately 3,400 to more than one lakh.

This expansion in the shareholder base is one of the most striking features of the case. Investigators suspect that preferential allottees used the growing retail demand to sell shares at elevated market prices.

This is the central allegation behind the suspected pump-and-dump operation: prices are promoted aggressively, new buyers enter, and earlier holders exit before the artificial demand disappears.

According to reports citing the investigation, the WhatsApp groups were suddenly deleted on February 25, 2026.

The two stocks subsequently experienced severe selling pressure, reportedly losing around 70% of their value within days.

Such declines can be especially damaging for retail shareholders because falling prices and lower circuits may restrict opportunities to exit positions.

The ED has identified connected beneficiary groups, including entities associated with Affluence Gems, Kawa HUF and Komalay Consultancy, as part of its investigation.

Investigators are examining the financial transactions and ownership relationships linking these entities to the preferential allotments.

During the searches, officials seized digital devices, transaction records, property documents and other materials relevant to the suspected scheme.

The freezing of approximately ₹200 crore in trading accounts is an investigative measure. It should not be confused with a final judicial determination of wrongdoing or a confirmed compensation fund for investors.

Similarly, the allegations against the companies and associated individuals remain subject to investigation and applicable legal proceedings.

For existing shareholders, the immediate concerns include regulatory developments, potential restrictions, governance questions and the companies’ ability to restore market confidence.

Investors should distinguish between the companies’ underlying operating businesses and the allegations concerning trading activity in their shares.

The investigation also highlights why unusual share-price movements, concentrated allotments and repeated social-media recommendations deserve careful scrutiny.

A rapidly increasing shareholder count does not necessarily demonstrate improving business fundamentals or sustainable earnings growth.

The next developments to monitor include official ED and SEBI findings, company disclosures, any further action against suspected beneficiaries and the legal status of frozen assets.

For retail investors, the broader lesson is that an investment recommendation circulating widely on WhatsApp is not evidence of a company’s financial strength.

The R&B Denims and R M Drip investigation illustrates how damaging alleged market manipulation can become when excitement replaces independent examination of business fundamentals.

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