The investigation centers on whether IBM misled investors regarding the stability of its Z enterprise computing platform. In April 2026, management projected a robust year, citing a 51% revenue surge in the Z division and promising continued growth throughout the second quarter. However, the outlook shifted by July 14, when the company reported that total revenue had stalled at a 1% increase, with infrastructure revenue contracting by 7%.

CEO Arvind Krishna attributed the reversal to a failure in closing large transactions and a broader shift in customer capital expenditure priorities. He acknowledged that the company failed to adapt quickly enough to changing market conditions. Reed Kathrein, the Hagens Berman partner leading the probe, is now examining the timeline of these internal developments to determine if the company possessed earlier warnings that these critical deals were at risk of collapse. The firm is currently soliciting information from investors with substantial losses and potential whistleblowers familiar with the company's internal sales data.