ED Freezes Rs 200 Crore in Massive 'Pump and Dump' Share Scam
The Enforcement Directorate raids 29 locations in Maharashtra and Gujarat, uncovering a massive pump and dump share manipulation scam.
The Enforcement Directorate (ED) has dealt a major blow to a sophisticated financial fraud network, freezing Rs 200 crore in trading accounts following a series of coordinated raids. The action comes amidst an investigation into an alleged pump and dump share manipulation scam that targeted retail investors across the country.
Multi-State Crackdown
On October 16, the federal agency conducted extensive searches at 29 different premises across Maharashtra and Gujarat. The operations spanned several key cities, including Mumbai and Nashik in Maharashtra, as well as Ahmedabad, Gandhinagar, Surat, and Bhavnagar in Gujarat. These raids were carried out under the provisions of the Prevention of Money Laundering Act (PMLA), 2002.
During the searches, the ED seized a wealth of incriminating evidence, including digital devices, property documents, records of share transactions, and various other critical documents. The agency targeted a wide array of locations, including:
- Offices of two primary companies involved in the scam.
- Residences of the company promoters.
- Homes of individuals who received share allotments at artificially low prices.
- Offices of finance firms and stock-broking houses.
- Premises of individuals suspected of managing promotional online messaging groups.
The Mechanics of the Manipulation
According to the ED's investigation, the scam operated through a calculated cycle of issuance and artificial inflation. Between April 2023 and March 2024, two specific companies issued more than 3.5 crore shares and convertible warrants to a select group of entities and individuals.
The agency revealed that the funding for these allotments originated from a tight-knit circle of connected lenders, firms, and individuals. While the shares remained concentrated within this small group, the prices were systematically pushed upward over several months.
The Role of 'Multibagger' Tips
To lure in unsuspecting retail investors, the perpetrators utilized social media and messaging communities. Groups with names like “Multibagger Stocks” began sending daily “buy” tips to the public between December 2025 and February 2026.
In a surprising twist of operational secrecy, the ED found that the SIM cards used to run these groups were registered in the names of third parties in Mumbai and Haryana. However, the actual operations were being managed from Bhavnagar, Gujarat.
The 'Dump' and the Victims
As retail investors acted on these fraudulent tips, the surge in buying interest caused the share prices and trading volumes to skyrocket. Once the prices reached a peak, the "preferential allottees"—who had acquired the shares at a fraction of the cost—dumped their holdings onto the retail investors, pocketing massive profits while leaving the newcomers with overvalued shares.
The ED has identified clusters of beneficiaries linked by family ties who benefited from this scheme. These individuals had used preferential warrants to secure low-cost shares before the systematic online campaign pumped up the market value.