Nithin Kamath Warns Against Stock Tips on WhatsApp Amid ED Probe
Zerodha's co-founder urges caution over stock advice shared on messaging platforms following a major money laundering investigation.
Enforcement Directorate freezes ₹200 crore in trading accounts linked to a pump-and-dump scheme.
Nithin Kamath advises verifying stock tips with AI tools like ChatGPT before acting.
The ED's investigation reveals a network of WhatsApp groups promoting inflated stock prices.
In a significant development, the Enforcement Directorate (ED) has frozen trading accounts worth approximately ₹200 crore as part of an investigation into an alleged pump-and-dump scheme involving stock promotions via WhatsApp. Zerodha co-founder Nithin Kamath has highlighted the dangers associated with stock tips circulated through messaging apps, urging investors to consult AI platforms like ChatGPT or Claude before making financial decisions based on such advice.
Kamath's warning comes in the wake of the ED's extensive probe, which included searches at 29 locations across cities such as Mumbai, Nashik, and Ahmedabad on October 16. The investigation focuses on two companies, R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd, which reportedly engaged in dubious stock promotion practices. The ED alleges that these companies issued over 3.5 crore shares and convertible warrants to select individuals, leading to manipulated stock prices.
According to the ED, the investigation uncovered that WhatsApp groups, operating under names like “Multibagger Stocks,” disseminated daily stock tips to retail investors from late December 2025 to February 2026. These groups, which used SIM cards registered to other individuals, were traced back to operations based in Bhavnagar, Gujarat. The agency noted a significant increase in stock purchases coinciding with these promotions, suggesting a coordinated effort to inflate prices.
The implications of this investigation extend beyond individual investors, as it raises concerns about the integrity of stock trading practices in India. The ED's findings indicate that a small group of connected individuals profited from the inflated prices while the majority of retail investors faced potential losses. Kamath's advice to verify stock tips through AI tools reflects a growing awareness of the risks associated with unverified financial information circulating on social media.
Looking ahead, the ED's investigation is ongoing, and further developments are expected as the agency continues to analyze the seized documents and digital records. Investors are advised to remain vigilant and skeptical of unsolicited stock tips, particularly those shared through messaging platforms, as the landscape of stock trading continues to evolve amid increasing scrutiny from regulatory bodies.
