After SEBI, ED crackdown against ‘pump and dump’ operators, ED raids 29 premises in 6 cities

The ED’s Mumbai Zonal Office-I conducted the searches on October 16 under the Prevention of Money Laundering Act (PMLA) in Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar. The premises searched included company offices, promoters’ residences, those who received shares at low prices, broking and finance firms, and individuals suspected of operating promotional WhatsApp groups. According to the ED, the two companies allotted more than 3.5 crore shares and convertible warrants to select persons between April 2023 and March 2024.

A substantial portion of the funding for these allotments allegedly came from a small network of connected individuals, firms and lenders. The agency suspects that the shares were subsequently pushed up in price while remaining largely concentrated among the same set of holders. Between late December 2025 and February 2026, WhatsApp groups, including ‘Multibagger Stocks’, allegedly circulated daily buy recommendations to retail investors.

The groups operated using SIM cards registered to individuals in Haryana and Mumbai but were allegedly run from Bhavnagar, the ED said. As retail participation increased, the allottees allegedly sold part of their holdings to a wider pool of investors. The ED identified several connected entities and family-linked clusters, including Affluence Gems, Kawa HUF and Komalay Consultancy, which it alleges acquired shares at low prices through preferential warrants.

The agency seized documents, digital devices, share transaction records and property papers during the searches. The investigation is ongoing. The number of investors in the two stocks reportedly increased from around 3,400 to more than one lakh within a short period. Moneycontrol had reported on April 27 that SEBI officials conducted searches at the premises of promoter-directors of both companies as part of a probe into suspected pump-and-dump activity.

SEBI’s search had also covered a merchant banking firm, involved primarily SME related issues. The regulator’s investigation focused on allegations that stock prices were artificially inflated through coordinated trading and corporate announcements to attract retail investors before operators sold their holdings at elevated prices. The SEBI searches lasted three days and resulted in the seizure of documents and digital evidence. Sources said, SEBI’s investigation in the case is ongoing.