Expanded securities class action alleges Kyndryl overstated free cash flow; stock plunged 55% after CFO and GC departure and SEC inquiry

National shareholder rights law firm Hagens Berman says it has identified an expanded securities class action filed against Kyndryl Holdings, Inc. (NYSE: KD), broadening the potential group of affected investors and adding new allegations related to the company’s free cash flow reporting.

Expanded class action and expanded class period

The newly filed action, Westchester Putnam Counties Heavy & Highway Laborers Local 60 Benefit Funds v. Kyndryl Holdings, Inc., et al. (S.D.N.Y.), seeks to represent all persons and entities who purchased or otherwise acquired Kyndryl securities between August 1, 2024, and February 6, 2026, inclusive (the Expanded Class Period).

Key allegations in the expanded complaint

Hagens Berman says the initial complaint focused on alleged failures to timely file financial reports and deficient internal controls. The expanded complaint, it adds, alleges that during the Expanded Class Period Kyndryl and its executives failed to disclose the following:

• Manipulated cash flow metrics: Kyndryl’s reported free cash flow was allegedly inflated by undisclosed and unsustainable cash management practices rather than genuine operational strength.
• The August 2025 “First Reveal”: The alleged shift began on August 4, 2025, when Kyndryl missed revenue and cash flow estimates, leading to a 21% stock drop. The complaint alleges management continued to reassure investors about the “durability” of its financial condition.
• SEC investigation and executive departures: On February 9, 2026, before the market opened, Kyndryl allegedly disclosed a voluntary document request from the SEC’s Enforcement Division regarding its cash management practices. The company also announced the immediate departure of its CFO and General Counsel.
• Total market fallout: After the February 9 announcement, Kyndryl’s stock allegedly fell 55%, dropping from $23.49 to $10.59 per share.

Company impact and alleged market reaction

According to the allegations described by Hagens Berman, the company’s disclosures and subsequent executive changes were followed by significant declines in its share price, including a 21% drop after the August 4, 2025 missed estimates and a 55% drop after the February 9, 2026 SEC-related disclosure and executive departures.

Lead plaintiff deadline and whistleblower information

The lead plaintiff deadline is listed as April 13, 2026.

Hagens Berman also notes that persons with non-public information regarding Kyndryl should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the program described, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC.

For contact details provided by the firm: call Reed Kathrein at 844-916-0895 or email [email protected].