The Enforcement Directorate (ED) has frozen trading accounts worth about Rs 200 crore after searching 29 premises across six cities in a money laundering probe into the alleged manipulation of shares of R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd, according to a press release issued by the agency. The action follows the Securities and Exchange Board of India’s (SEBI’s) crackdown on suspected stock market manipulation involving the two companies.
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.
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.