WhatsApp Stock Tips: Kamath Warns After ED’s Rs 200 Crore Freeze

Zerodha founder and CEO Nithin Kamath warned investors on October 20 against promises of easy stock-market gains circulating through messaging apps and social media, as the Enforcement Directorate investigated an alleged manipulation scheme involving two listed companies. Economic Times Markets reported that the agency had frozen trading accounts holding shares worth about Rs 200 crore.

In a post on X, Kamath said investors continued to fall for such pitches on WhatsApp, Telegram, SMS and other platforms. He cautioned that pump-and-dump cases could become more frequent as the market cycle progresses, pointing to stock and initial public offering promotions through messaging groups and influencers.

ED traces allotments, funding and promotional campaigns

According to the ED’s account, its Mumbai Zone searched 29 premises across Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar during the preceding week. The searches were conducted under the Prevention of Money Laundering Act.

The investigation concerns preferential share allotments made by two listed companies between April 2023 and March 2024. The agency alleged that a substantial share of the money used to fund those allotments originated from a small network of connected individuals, firms and lenders.

Investigators suspect that shares acquired through these allotments were later promoted in coordinated campaigns to increase buying interest and prices. Preferential allottees allegedly used the resulting demand to sell part of their holdings to investors.

WhatsApp recommendations under scrutiny

The ED alleged that WhatsApp groups using names such as “Multibagger Stocks” sent retail investors daily buy recommendations from late December 2025 through February 2026. According to the agency, the groups operated from Bhavnagar in Gujarat, using SIM cards obtained in other people’s names in Haryana and Mumbai. Promotional activity also extended to X, SMS and other channels.

The agency said the promotion coincided with significant increases in the prices and trading volumes of the shares concerned. It alleged that preferential allottees then sold some of their holdings into that buying interest.

These are investigative allegations, not findings of guilt. The reported Rs 200 crore figure describes the approximate value of shares held in the frozen accounts; it does not establish the amount of investor losses or unlawful gains.

Kamath urges investors to question easy-return pitches

Kamath urged investors to challenge messages promising easy returns rather than act on them immediately. He also suggested asking AI tools such as Claude or ChatGPT whether a stock tip makes sense, saying that an initial check could help investors avoid costly mistakes.

His broader warning concerns the risk of buying on promotional claims: in a pump-and-dump scheme, efforts to inflate demand allow existing holders to sell at elevated prices, leaving later buyers exposed when that support fades. His comments about influencers and IPO promotions were a wider market warning, rather than an ED finding that every such promotion is fraudulent.