Good morning. Kyndryl Holdings is the latest Fortune 500 company to face an accounting and internal control review, prompting a delay in its filings.
The tech company, formerly IBM’s managed IT services business, disclosed on Monday that its audit committee is reviewing the company’s accounting following voluntary document requests from the U.S. Securities and Exchange Commission’s (SEC) Division of Enforcement.
According to a Monday SEC filing, the company’s audit committee is examining its cash management practices, related disclosures (including how it presents adjusted free cash flow), the effectiveness of internal control over financial reporting, and related matters in response to the SEC’s voluntary information requests. This review is delaying completion of the quarterly report and the company’s internal control assessment, but at this time, the company does not expect any impact on its consolidated financial statements.
CFO David Wyshner and General Counsel Edward Sebold have departed their positions, effective immediately, and Harsh Chugh has been appointed interim CFO. Bhavna Doegar was appointed interim corporate controller, and Mark Ringes interim general counsel. The stock price was down more than 50% at the close of trading on Monday.
The news follows Kyndryl’s most recent earnings call, where the company highlighted improved contract signings and adjusted free cash flow as evidence of turnaround progress. That backdrop could help explain the sharp selloff: investor concern appears less about business performance and more about governance, as questions around cash management, internal controls, and the sudden exits of executives.
Investors would understandably be nervous when both the CFO and the general counsel depart, according to Shivaram Rajgopal, an accounting professor at Columbia Business School. “The red flags are already out—two senior executives responsible for the integrity of financial statements are gone,” he told me. “What else can you look for? What does this say about the internal controls of the whole company? Is this a rotten apple (isolated) or a rotten barrel (more systemic)?” From turnaround story to control questions
Kyndryl, led by CEO Martin Schroeter, operates essential IT systems for financial institutions, airlines, retailers, and industrial companies. When Kyndryl was spun off by IBM in late 2021 and began trading on the New York Stock Exchange, the company was in the spotlight to deliver a turnaround story.
Being just below break-even in its first year meant that “we had a lot of work to do,” Wyshner, who joined Kyndryl in 2021, told me in a May 2025 interview.
The company made its debut on the Fortune 500 in 2023. In 2025, it appeared on the list at No. 265, generating $16 billion in annual revenue in 2024.
Chugh, the interim CFO, joined the company in 2021 as COO and became global head of practices in corporate development and administration in January. He previously held leadership roles at IBM.
“Long term, Kyndryl needs a permanent CFO who is controls-first and cash-disciplined, not just market-facing,” said Shawn Cole, president and founding partner of executive search firm Cowen Partners.
“The right profile has real accounting depth (ideally controllership- or chief accounting officer–caliber fluency), can pressure-test free cash flow mechanics, and will install durable checks and balances across controllership, reporting, and governance,” Cole told me.
In this context, he explained, the CFO hire must be evaluated alongside the broader finance leadership structure—controller and CAO strength, systems, and governance—because the team and controls are now part of the question. The goal is not only the right leader, but a finance function that consistently produces numbers investors can trust. He also said the team should be evaluated as soon as possible.
Sheryl Estrada [email protected]
The post At IBM spinoff Kyndryl, the stock dives 50% after an accounting probe and CFO exit: ‘The red flags are already out’ appeared first on Fortune.
