Why did Kyndryl stock drop on February 9, 2026?

The price fell over 50% after Kyndryl disclosed an SEC enforcement inquiry into its cash management and "adjusted free cash flow." The company admitted to material weaknesses in internal controls and warned that its previous 2025 financial reports and auditor opinions are no longer reliable.

What are the SEC allegations against Kyndryl Holdings?

The SEC's Division of Enforcement requested documents regarding Kyndryl’s cash management practices and the drivers behind its "adjusted free cash flow" metrics. This suggests regulators are investigating whether the company used non-GAAP figures to potentially mislead investors about liquidity.

Which Kyndryl executives resigned during the 2026 financial investigation?

CFO David Wyshner and General Counsel Edward Sebold both departed the company immediately following the disclosure of the SEC inquiry and internal audit. Such high-level exits during an accounting probe are typically viewed by the market as a major red flag regarding corporate governance.

Is there a class action lawsuit against Kyndryl for stock losses?

Faruqi & Faruqi, LLP is investigating potential securities claims against Kyndryl. Lawsuits usually follow disclosures of "material weaknesses" and SEC inquiries. Investors who suffered significant losses in KD stock or options are being encouraged to contact legal counsel to discuss rights.

What does it mean that Kyndryl’s 2025 10-K is no longer reliable?

It means the financial statements previously issued for the fiscal year ending March 31, 2025, contain errors or lack proper oversight. Investors can no longer trust those numbers for valuation, and the company will likely need to restate its earnings once the internal audit is complete.

Kyndryl Holdings, Inc. - Faruqi & Faruqi LLP

Kyndryl Holdings, Inc.

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If you are a Kyndryl Holdings investor who suffered a loss and would like to learn more, you can provide your information below:

If you suffered significant losses in Kyndryl stock or options and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310).

Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Kyndryl Holdings, Inc. (“Kyndryl” or the “Company”) (NYSE: KD).

STOCK DROP: On February 9, 2026, Kyndryl disclosed in a filing with the U.S. Securities and Exchange Commission that its Audit Committee is reviewing the Company’s cash management practices, related disclosures (including regarding the drivers of the Company’s adjusted free cash flow metric), and the efficacy of its internal control over financial reporting following the Company’s receipt of voluntary document requests from the SEC’s Division of Enforcement.

Kyndryl further disclosed that it expects to report material weaknesses in internal control over financial reporting for multiple reporting periods. The Company also stated that its previously issued assessment of internal control over financial reporting and its independent auditor’s opinion included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2025 should no longer be relied upon.

In addition, Kyndryl announced the immediate departures of its Chief Financial Officer and General Counsel and filed a Form NT 10-Q indicating that it would delay the filing of its Quarterly Report on Form 10-Q.

Following these disclosures, Kyndryl’s stock price declined approximately 50% on February 9, 2026.

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