At IBM spinoff Kyndryl, the stock dives 50% after an accounting probe and CFO exit

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
sheryl.estrada@fortune.com

Leaderboard

Adrian Mitchell was appointed CFO of Warby Parker Inc. (NYSE: WRBY), a direct-to-consumer lifestyle brand and eyewear company, effective Feb. 10. Mitchell has more than 25 years of experience. Most recently, he served as chief operating officer and CFO of Macy’s, Inc., where he helped modernize operations by embedding AI-driven tools across the enterprise. He was also previously CFO, COO and interim CEO of Crate & Barrel Holdings, where he led a digital-first transformation.

Indraneel “Neel” Dev was appointed EVP and CFO of WESCO International, Inc. (NYSE: WCC), a logistics services and supply chain solutions provider. He will succeed Dave Schulz, EVP and CFO, who expects to retire in May. Dev will join the company in February for a transition period. Most recently, Dev served as the CFO and chief revenue officer of Congruex LLC. Before that, he served as CFO of Lumen Technologies. He previously held various senior finance leadership roles at Level 3 Communications, MCI, and MFS Communications.

Big Deal

“The automation curve in agentic commerce” is a report by McKinsey that finds agentic AI is increasingly a part of shopping, but not all transactions will be automated in the same way. The report examines what agents will handle and the situations that will call for human involvement.

“This is the year AI agents stopped being an experiment and became part of how people shop, not in headline-grabbing ways but in everyday moments—helping shoppers make sense of choices, assemble baskets, resolve trade-offs, and move toward action,” according to the report.

Going deeper

“Why that $2 trillion software stock wipeout didn’t derail the AI bull market” is a Fortune article by Jim Edwards. 

“The contrast between this week’s bullish rally and last week’s AI-induced sell-off could not be more stark,” Edwards writes. “To put it in perspective, $2 trillion was wiped off the market cap of software companies last week, which traders thought might be decimated by AI companies replacing them.” Read more here.

Overheard

“Define what teams can decide, what they can spend, and when they must escalate, then let them execute. Constant approvals feel like safety but create latency and helplessness.”

—Amy Eliza Wong, a Silicon Valley advisor, author, and keynote speaker, writes in a Fortune opinion piece titled, “The next 18 months of the agentic era will feel like a slow-motion stress test for CEOs. Most will make the same critical mistake.”