At IBM spinoff Kyndryl, the stock dives 50% after an accounting probe and CFO exit: ‘The red flags are already out’

Core Viewpoint - Kyndryl Holdings is undergoing an accounting and internal control review, leading to delays in its filings, following requests from the SEC's Division of Enforcement [1][2] Group 1: Accounting and Internal Control Review - The audit committee is examining cash management practices, disclosures related to adjusted free cash flow, and the effectiveness of internal controls over financial reporting in response to SEC requests [2] - The review is causing delays in the completion of the quarterly report and the internal control assessment, but the company does not expect any impact on its consolidated financial statements [2] Group 2: Executive Departures - CFO David Wyshner and General Counsel Edward Sebold have left their positions immediately, with Harsh Chugh appointed as interim CFO, Bhavna Doegar as interim corporate controller, and Mark Ringes as interim general counsel [3] - The stock price fell by more than 50% at the close of trading on the day of the announcement [3] Group 3: Investor Concerns - Investor concerns appear to be focused on governance issues rather than business performance, particularly regarding cash management and internal controls following the sudden executive departures [4] - An accounting professor highlighted the significance of the departures, questioning the integrity of the company's financial statements and the state of internal controls [5] Group 4: Company Background - Kyndryl, led by CEO Martin Schroeter, provides essential IT systems for various sectors, including financial institutions and airlines [6] - The company was spun off from IBM in late 2021 and aimed to deliver a turnaround story, having been just below break-even in its first year [6]