Spotify Dragged Into Family Feud Between An Investor and His Brother
A dispute between early backer Shakil Khan and his sibling highlights the new public scrutiny that Spotify now faces as a soon-to-be public company.
At a 2012 tech conference in London, Shakil Khan, once described by Wired as Spotify CEO Daniel Ek's "second-in-command" and by Thomson Reuters as his "eyes and ears," told the crowd that Ek "needed somebody to be on a plane and supporting him around the world. That's what I do."
But there's no mention of the British entrepreneur in Spotify's filing to go public with the Securities and Exchange Commission (SEC). Spotify and Khan tell Billboard that's because he has never been a senior employee or director despite having had a Spotify email address: He's an investor and consultant who helped Spotify launch in markets like the United States, letting Ek sleep on the floor of his London flat as they got the startup off the ground. He once described his role as being on "the advance forward team… making sure that the right people knew about it, so that when we did arrive, we did it with a bang."
The 44-year-old co-founder of Student.com and founder of CoinDesk changed his LinkedIn profile earlier this year from Spotify "head of special projects" to "investor and adviser."
Questions about Khan's Spotify role arose in February during a U.K. court case between Khan and his older brother, Tanweer, head of credit and emerging markets financing at UniCredit's HypoVereinsbank. After a spat over an online car-sales business that Shakil declined to back, Tanweer sent about 70 emails over nine months -- some of them from a different name -- to senior Spotify executives and board members alerting them to Shakil's past criminal convictions, including a drug offense for which he was sentenced to two-and-a-half years in prison, according to court documents.
Tanweer warned board members that the failure to disclose Shakil's prominent role at Spotify and criminal record could damage its impending listing on the New York Stock Exchange, telling the judge "that as a financial market participant it is my moral, legal and fiduciary responsibility to warn clients about investing in Spotify," and that actions such as the "amending of his online profiles" could "lead to investors being deprived of the full information mix." In May 2017, Ek retweeted a link to a tech blogger's podcast in which Shakil said he regretted stealing cars and selling drugs earlier in his life, but Ek deleted the retweet several months later.
Shakil filed a harassment complaint against his brother, but the judge ruled in Tanweer's favor, writing: "It is clear that [Shakil] has played a very prominent public role in relation to Spotify, going far beyond the role of investor."
Shakil tells Billboard that "it's extremely regrettable that my brother's campaign against me over the last year, based partly on a misunderstanding about my involvement with Spotify, left me with no option but to take legal action to try and stop him. It was the last thing I wanted to do. I suffered a serious heart attack in 2016 and so was forced to scale back all my work commitments. But even my fragile health was not enough to get him to stop."
He added that he has "never been an employee of Spotify or had any executive role at the company, contrary to what my brother believes. I was called Head of Special Projects but the simple fact is that I was an early investor in Spotify and have provided advisory and consultancy services to them. My brother's actions also left me with no option but to reopen parts of my past from over twenty years ago that I have always regretted. Fortunately, over the last two decades I have been able to turn my life around and make a positive contribution. I hope my brother and I can now put aside our differences without needlessly involving others, as all I want is to move on from this unfortunate family matter."
Tanweer declined to comment, but sources say he has brought his concerns to the SEC.
The dispute, which a Spotify rep says is a family matter that it "has nothing to do with," highlights the new public scrutiny that it now faces as a soon-to-be public company, after a decade spent amassing 71 million subscribers and 3,000 employees.
Glaser Weil initial-public-offering lawyer Jeffrey Soza says that only Shakil's current involvement should matter to the SEC, and "the standard rule is: no material misstatements and no omissions. Someone's job title is not determinate. If someone is not an employee or director, but they are expected to make significant contributions to the business -- or are functioning like an executive officer and being treated as a contractor to avoid disclosure -- then such persons must be identified, and their backgrounds disclosed. If they're just an adviser who works part-time and has no real responsibility, then probably not."