Judge: Travelers Stock Plan Violated Law

Bloomberg News

Travelers Group Inc., which merged with Citicorp last year to form Citigroup Inc., violated California's labor code by using a stock purchase plan to keep its employees from leaving, a state judge concluded. The conclusion by Los Angeles County Superior Court Judge Aurelio N. Munoz was reached in a 1998 lawsuit filed on behalf of as many as 10,000 current and former Travelers employees. Travelers and its subsidiaries are accused of unlawfully inducing the workers to purchase restricted stock in Travelers in lieu of earned wages. The suit could result in hundreds of millions of dollars for the workers, their lawyers said.

"The problem with the plan is that if you leave the company for any reason within two years--that is, you quit, are fired or die--you forfeit the stock," plaintiffs' attorney Kevin P. Roddy said.

Citigroup, based in New York, is the world's No. 1 financial services firm. Spokesman Richard J. Howe called the numbers "grossly overstated" and said the company plans to appeal.

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