Kyndryl Faces Class Action Over Reported Free Cash Flow Metrics

Lawsuit alleges company concealed true financial condition prior to 55% stock collapse

Apr. 5, 2026 at 6:35pm by Ben Kaplan

Got story updates? Submit your updates here. ›

A national shareholder rights law firm has filed an expanded securities class action lawsuit against Kyndryl Holdings, Inc. (NYSE: KD), alleging the company's much-touted free cash flow metrics were a mirage built on undisclosed and unsustainable cash management practices, concealing Kyndryl's true financial condition prior to a 55% stock price collapse.

Why it matters

Kyndryl, a major IT infrastructure services provider spun off from IBM in 2021, has faced intense scrutiny from investors over its financial reporting and growth prospects. This lawsuit alleges the company misled the market about a key financial metric, which could have significant implications for Kyndryl's credibility, stock price, and future outlook.

The details

The lawsuit claims Kyndryl's reported free cash flow—a closely watched indicator of a company's financial health and growth potential—was artificially inflated through undisclosed and unsustainable cash management practices. This allegedly allowed Kyndryl to conceal its true financial condition from investors prior to a 55% plunge in its stock price.

  • The expanded class action lawsuit was filed on April 5, 2026.
  • Investors have until April 13, 2026 to join the class action.

The players

Kyndryl Holdings, Inc.

A major IT infrastructure services provider that was spun off from IBM in 2021.

Hagens Berman

A national shareholder rights law firm that filed the expanded securities class action lawsuit against Kyndryl.

Got photos? Submit your photos here. ›

What’s next

Investors have until April 13, 2026 to join the class action lawsuit against Kyndryl.

The takeaway

This case highlights the importance of scrutinizing a company's financial reporting, particularly when it comes to key metrics like free cash flow, which can be susceptible to manipulation. Investors will be watching closely to see how Kyndryl responds to these allegations and whether the company's credibility and stock price can recover.