UBS to pay $1.5 billion to settle Libor charges

UBS has agreed to pay a fine of $1.5 billion to authorities and plead guilty to a felony count of wire fraud, the most recent developments in a far-reaching probe into how banks manipulated interest rates leading up to the financial crisis.

Two former traders were also charged with conspiracy in a complaint unsealed Wednesday, the first people charged criminally in the Libor scandal.

"We cannot and we will not tolerate misconduct on Wall Street of the kind admitted to by UBS today and by Barclays last June," said Assistant Atty. Gen. Lanny Breuer, head of the criminal division. In June, Barclays was the first bank to settle with authorities, paying $450 million.

The fine was one of the biggest leveled against a financial institution by American and British authorities, just short of the $1.9-billion fine HSBC agreed to pay last week over money laundering allegations.

The charges relate to the ways traders leaned on banks to manipulate the London interbank offered rate, or Libor, to benefit their own trading positions.

Officials said that from 2006 through 2009 UBS traders placed bets on the movement of Libor and manipulated the rate, which is used as a benchmark to set interest rates for many mortgages, credit cards and other consumer lending instruments. The traders profited by knowing which way the Libor would move.

In coming months, the probe probably will expand to include other banks that help determine the Libor, analysts say. But it's the criminal charges that turned some heads on Wall Street on Wednesday.

The plea agreement on wire fraud charges by a UBS subsidiary in Japan, which included a $100-million fine, marks the first time since 2005 that a major financial institution has pleaded guilty to criminal charges, the Justice Department said.

"For a bank to admit to criminality is kind of mind-blowing," said Peter Shapiro, managing director of Swap Financial Group in South Orange, N.J. "Obviously, they didn't do that easily — that was something that must have been a big priority of enforcement agencies."

Enforcement agencies have been feeling some pressure to level blame on financial institutions in the wake of the financial crisis, Shapiro said. No senior financial executives have served jail time for their roles in the financial crisis.

"Both the regulators and enforcement agencies feel somewhat beleaguered by the repeated assertions that they failed to deliver enough heads on a plate as a response to the financial crisis," he said.

U.S. officials also announced criminal charges against two former senior traders for UBS in connection with the scandal. Tom Alexander William Hayes, 33, of Britain, was charged with conspiracy and wire fraud, and Roger Darin, 41, of Switzerland, was charged with conspiracy. Both remain abroad, but the Justice Department will try to extradite them.

"The motivation here was nothing short of sheer greed, and the scheme was nothing short of a shell game, a Wall Street version of three-card monte," said Kevin Perkins, associate director of the FBI, which helped investigate the case.

More criminal charges at other banks could follow, said Anthony Sabino, professor of law at the Tobin College of Business at St. John's University.

"Once you start to round up some accused bad guys, that leads to more people being rounded up," he said. "This is a vast conspiracy among a multitude of banks, which therefore implicates a multitude of individuals."

Much of the activity took place at UBS Japan Securities Co., where Hayes was a senior trader. The Justice Department released internal UBS messages in which Hayes and others talked about their alleged manipulation.

In one from November 2006, Hayes told a UBS employee who submitted rate information for the Libor that he and Darin "skew the Libors a bit" and then said he needed the six-month rate to stay high for three days.

UBS traders were often colorful and emphatic in their pleadings, according to documents released by Britain's Financial Services Authority. One wrote, "I need you to keep it as low as possible.... If you do that, I'll pay you, you know, $50,000, $100,000, whatever you want."

The UBS fine was larger than that leveled on Barclays earlier in the year because UBS' misconduct was "considerably more serious than Barclays' because it was more widespread within the firm," the Financial Services Authority said. At least 45 individuals at UBS were involved in or aware of the rate-fixing practice.

UBS said that it had fully cooperated with authorities and that the interest-rate manipulations were the isolated actions of certain employees.

"Their misconduct does not reflect the values of UBS nor the high ethical standards to which we hold every employee," UBS CEO Sergio Ermotti said in a statement.

Analysts say that there's still potential for significant civil suits against UBS and other banks, which could be more damaging than the fines levied against them. Keefe, Bruyette & Woods, an equity research firm, estimated in July that potential industry damages could reach $35 billion.

Those estimates were validated Wednesday when the Inspector General for the Federal Housing Finance Agency estimated that government-owned Fannie Mae and Freddie Mac may have lost a combined $3 billion because of reduced interest payments on securities and other holdings. Officials at FHFA, which regulates Fannie and Freddie, have not confirmed the estimate but are evaluating potential issues involved with the Libor manipulation.

There are barriers to further lawsuits — the burden of proof will be high, analysts at Keefe, Bruyette & Woods said. To move forward with civil suits, plaintiffs would have to prove that traders were conspiring, said John C. Coffee, a Columbia Law School expert in corporate fraud.

"But that said, the size of the potential liability is mushrooming," he said.

Times reporter E. Scott Reckard contributed to this report. Semuels reported from Los Angeles and Puzzanghera from Washington.

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Panel faults security failures in Benghazi attacks

WASHINGTON — The State Department was guilty of "systematic failures" in security that made the deadly Sept. 11 terrorist attacks on the U.S. mission in Libya possible, a high-level investigative panel concluded in an unflinching examination made public late Tuesday.

The panel faulted the department for ignoring requests from U.S. diplomats in Tripoli for security assistance and for relying on ill-prepared local militias and inadequate equipment to protect the mission in Benghazi. It found that two key bureaus failed to properly coordinate their security planning, and it pointed to a failure in leadership by officials at several levels.

"Systematic failures and leadership and management deficiencies at senior levels within two bureaus of the State Department resulted in a … security posture that was inadequate for Benghazi and grossly inadequate to deal with the attack that took place," the report says.

The attacks by dozens of Islamist militants killed Ambassador J. Christopher Stevens and three other Americans and set off a broad reexamination of how the U.S. government protects its thousands of diplomats in dangerous parts of the world. The incident has also become the focus of a months-long battle between the Obama administration and Republican critics, who contend officials have sought to cover up their lapses.

United Nations Ambassador Susan Rice was among those caught up in the political fray, eventually withdrawing her name from consideration as secretary of State after fierce criticism of her comments on television talk shows regarding the Benghazi attacks.

According to the report, which is likely to represent the government's lasting judgment on the attacks, the assault was the calculated effort of militants and not a "spontaneous" reaction of an outraged crowd, the first explanation offered by U.S. officials.

Yet the five-member independent panel said that, despite the lapses, no officials had failed to carry out their duties in a way that required disciplinary action.

It also determined that there had been "no immediate, specific intelligence" on the threat against the mission.

The report prepared for lawmakers includes classified sections.

Secretary of State Hillary Rodham Clinton said in a letter to congressional committees that she has accepted "every one" of the Accountability Review Board's 29 recommendations, several of which remain classified.

She praised the board, saying that it had offered "a clear-eyed look at serious, systematic challenges that we have already begun to fix."

To begin remedying the problems, officials are planning to reallocate $1.3 billion that was to be spent in Iraq to add hundreds of Marine guards and diplomatic security personnel, and to bolster security infrastructure in dangerous locations.

The board, which was convened in September, was led by retired Ambassador Thomas Pickering and former Joint Chiefs of Staff Chairman Adm. Michael G. Mullen. The two will meet Wednesday in closed session with the Senate and House foreign affairs committees to discuss the findings.

On Thursday, the committees will convene again in public session to discuss the report with Clinton's deputies, William J. Burns and Thomas Nides. Clinton had agreed to appear before the committees Thursday, but asked to be excused last weekend after suffering a mild concussion in a fall. She has told the committees she would answer their questions in January.

The report criticizes officials for waiting to react to specific threats rather than anticipating the dangers that U.S. officials could face in a deteriorating security environment.

More than a year after the end of the end of a revolution that brought down Libyan leader Moammar Kadafi, the nation is still overrun by rival armed groups and lacks a central authority that can guarantee security for foreign missions, as it is required to do under international agreements.

Accountability Review Boards are set up under federal law to examine failures and assign blame. This one found shortcomings in the bureaucratic system, in personnel and equipment.

The report details how the Libyan militias that were supposed to protect the compound were not capable of carrying out the assignment. It deems the mission's fire-safety equipment and physical protections inadequate, and adds that the security arrangements were weakened by the relative inexperience and rapid turnover of personnel, despite their courage.

It also cites "diminished institutional knowledge, continuity and mission capacity."

The report says the mission security shortcomings were made clear by Stevens' trip to Benghazi. Stevens, one of the most respected U.S. diplomats in the region, believed that he faced no special threat in his visit to Benghazi, even though the general level of risk had been on the rise for much of the year.

And the security officials assigned to protect him were not even aware of the specifics of his plans to travel outside the compound during his visit, the panel said.

The investigative panel found that although officials in the U.S. Embassy in Tripoli had sought more security staffing in Benghazi, they had generally not done enough to try to improve security at the lightly protected Benghazi mission.

It said their faith in a local militia and contract security personnel was "misplaced," noting that some militia members had stopped accompanying the mission vehicles to protest their salary and hours.

Among State Department personnel, "there appeared to be very real confusion over who, ultimately, was responsible and empowered to make decisions based on both policy and security considerations," the report says.

The report says certain senior officials in the State Department's Diplomatic Security and Near East Affairs bureaus, whom it didn't identify, "demonstrated a lack of proactive leadership and management ability" in their responses. "However, the board did not find a reasonable cause to determine that any individual employee breached his or her duty," it adds.

The report calls for a strengthening of security and for the department to "urgently review the proper balance between acceptable risk and expected outcomes in high risk, high threat areas."

paul.richter@latimes.com

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Cassadee Pope wins Season 3 of 'The Voice'

NEW YORK (AP) — Cassadee Pope, who was country singer Blake Shelton's protege on the third season of NBC's "The Voice," has won the show's competition.

The 23-year-old singer is stepping out into a solo career after performing with a band called Hey Monday. Her victory over Scottish native Terry McDermott and long-bearded Nicholas David was announced at the end of a two-hour show Tuesday.

"The Voice" has grown into a hit for NBC and was the key factor in the network's surprising success this fall.

The show's status was affirmed by the stream of hitmakers who performed on the finale. They included Rihanna, Bruno Mars, the Killers, Smokey Robinson and Peter Frampton.

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Instagram draws ire over new user rules

SAN FRANCISCO — When it comes to policy changes, Instagram could have used a filter of its own.

Its usually devoted users threatened to delete their accounts en masse Tuesday if the popular photo-sharing app did not roll back new terms of service that appeared to give the company ownership of their images. Instagram users — about 100 million now — snap the photos on their smartphones, apply digital filters to enhance the photos and then instantly share them with friends.

"Dear @Instagram, why did you think we'd just be OK with your new terms? They are NOT COOL. Signed, The Entire Internet," Jason Pollock, a Los Angeles filmmaker and social media consultant, wrote on Twitter.

Instagram founder Kevin Systrom tried to calm the uproar and reassure users in a blog post Tuesday afternoon.

"Instagram does not claim any ownership rights over your photos," he wrote. "We respect that your photos are your photos. Period."

Instagram's new terms of service announced Monday included a clause stating that Instagram had the right to turn images into advertisements without any approval from or compensation for users starting Jan. 16. — part of Facebook's drive to make money from the service it bought this year for $715 million in cash and stock.

That angered amateur and professional photographers alike — even Facebook Chief Executive Mark Zuckerberg's wedding photographer.

"Pro or not if a company wants to use your photos for advertising they need to TELL you and PAY you," Noah Kalina said on Twitter.

The effort to make money from Instagram users struck a nerve. According to the Pew Research Center's Internet & American Life Project, nearly half of Internet users post photos and videos online that they have created themselves.

Kurt Opsahl, a senior staff attorney with the Electronic Frontier Foundation, said Instagram quickly realized it had "overplayed its hand." But its mea culpa blog post still contains plenty of loopholes, he said.

"They say they don't have any plans to put your photos in an advertisement, but nevertheless that is the permission they were seeking," Opsahl said. "We will have to see what the language of the terms of service looks like after they revise it."

Jeff Lawrence, a 29-year-old DJ, graphic designer and photographer from Seattle, said he'll decide if he's dumping Instagram after he sees what the company plans to do in black and white.

"Thankfully we are all Internet savvy enough to know that people can say one thing and do another," said Lawrence, an avid Instagram user. "I am going to wait and see if Instagram takes this criticism to heart and changes the terms of service."

The backlash underscored the rising tensions between users of free social media services and the companies that are trying to profit from them. More users are asking for more control over how these companies handle their information.

Clayton Cubitt, 40, a photographer and filmmaker from Brooklyn, N.Y., quickly dubbed the new terms of service a "suicide note" from Instagram.

He urged his fellow Instagram users to revolt against the current policies at social media companies that he described as "you have a free place to post content and in exchange the company sucks the soul out of your life."

"They look at users as a herd to milk," Cubitt said.

His rants may have angered Zuckerberg, but Zuckerberg's sister Arielle Zuckerberg publicly "liked" Cubitt's Instagram snapshot of the most controversial part of Instagram's terms of service.

It's unclear if the Instagram backlash will cause lasting damage to the service.

Hacker collective Anonymous had urged its more than 780,000 Twitter followers to ditch Instagram with the hashtag #BoycottInstagram and posted screen shots from followers who had. The servers of Instaport.me, which helps users download their photos from Instagram, were overloaded Tuesday as Instagram users deleted their accounts and switched to other options such as Hipstamatic and Twitter's new photo service that has filters similar to Instagram. Yahoo said it has seen "strong interest" in its new Flickr app for iPhones.

Many Instagram users said they would give Instagram the benefit of the doubt — for now.

"I am going to rage about it, and get people to rage about it, until we change their policy," Pollock, 31, said in an interview. "There is just something so personal and beautiful about Instagram. Hopefully they don't completely ruin it."

jessica.guynn@latimes.com

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Adam Lanza's family had kept a watchful eye on him

STAMFORD, Conn. — When the parents of Adam Lanza divorced, the settlement left Nancy Lanza with $24,150 a month in alimony payments and able to live a comfortable life and care for her troubled son.

Nancy Lanza, 52, was her son's first victim Friday, shot to death in the spacious homethey shared, authorities said. Adam, 20, then took his mother's car to Sandy Hook Elementary School, where he shot his way into the building and opened fire, killing 20 children and six adults before turning a gun on himself.

New details emerged Monday about how Adam Lanza's family and the staff at his high school kept a watchful eye over the reserved boy, who seemed to spend much of his time in solitude after finishing high school.

PHOTOS: Sandy Hook shootings

Friends of the family said he suffered from Asperger's syndrome, a form of autism. As early as age 10, Adam Lanza was taking medication, according to his former baby sitter, Ryan Kraft, now an aerospace engineer in Hermosa Beach.

"I know there was something administered. I'm not sure what," he said. There were never any signs that Lanza was dangerous, he said. "There were no red flags that would say something like this would happen."

Nancy Lanza cautioned Kraft to never let him out of his sight, even briefly. "The instructions were to always supervise him visually," he said.

FULL COVERAGE: Sandy Hook shootings

That echoed recollections from others who said Nancy Lanza was a constant presence in her son's life. "She truly cared for both of her sons deeply," said Amanda d'Ambrose, 23, whose brother befriended Adam Lanza in high school. "I just want the world to know what a beautiful soul that she is."

John Wlasuk, who played Babe Ruth baseball with Lanza as a youth, said the boy's mother was "always at the games, always really involved with her kids."

Wlasuk said he sometimes went to the Lanza house with his father, a plumber, who told him of the room in the basement where Lanza spent a lot of time playing video games. As Wlasuk's father described it, the room had posters of military weaponry, and Lanza would be playing violent video games such as "Call of Duty."

"I wouldn't say it was a shrine to the military or anything, a couple of posters with a bed and a desk and a computer," he said.

Richard Novia, who formerly advised the Newtown High Schooltechclub that was one of Lanza's few social outlets, said Lanza had been placed in a special program for students who were considered at risk of being bullied — though he had no recollection of Lanza being harassed.

Novia said he was told that Lanza had a medical condition that hindered his ability to feel pain, so that if he cut himself or stubbed his toe, he might not even know he was hurt and could continue to harm himself.

When Lanza was in elementary school, his mother fretted about his schooling.

"She was concerned mainly that Adam wasn't fitting in well in his classroom," said Wendy Wipprecht, whose son had also been diagnosed with a form of autism. She said Nancy Lanza considered moving her son to a private Catholic school, orhomeschooling him, but did not join sessions of any of the local autism parents' support groups that Wipprecht attended.

"She may have decided that there wasn't a support group that would fit," Wipprecht said. "Who knows. She may have been overwhelmed."

There is no mention of Adam Lanza's emotional troubles or any domestic strife in his parents' divorce papers. Last week, Ryan Lanza told investigators that the divorce could have had an effect on his younger brother.

Peter and Nancy Lanza married in 1981 in New Hampshire. She sued her husband for divorce in 2008, citing irreconcilable differences.

In their 2009 settlement, Nancy and Peter Lanza agreed to joint custody of Adam, then 17, who would live with his mother but have regular visits from his father. In addition to the alimony, Peter Lanza would cover the children's medical insurance.

Court records show that Nancy Lanza was due to receive $289,800 in alimony in 2012, or $24,150 each month. Peter Lanza, an executive at General Electric who was earning an annual salary of about $445,000 in 2009, also would pay for both their sons' college and graduate school educations and for a car for Adam.

The street where Nancy Lanza and her son lived was reopened by police Monday. The borders of the grassy, tree-lined hill it sits on are still cordoned off with yellow police tape.

shashank.bengali@latimes.com

molly-hennessy-fiske@latimes.com

kim.murphy@latimes.com

Bengali and Hennessy-Fiske reported from Newtown, Conn., and Murphy from Seattle.

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Judge rejects Apple injunction bid vs. Samsung

(Reuters) – A U.S. judge on Monday denied Apple Inc‘s request for a permanent injunction against Samsung Electronics‘ smartphones, depriving the iPhone maker of key leverage in the mobile patent wars.

Apple had been awarded $ 1.05 billion in damages in August after a U.S. jury found Samsung had copied critical features of the iPhone and iPad. The Samsung products run on the Android operating system, developed by Google.

Apple and Samsung are going toe-to-toe in a patents dispute that mirrors the struggle for industry supremacy between the two companies, which control more than half of worldwide smartphone sales.

For most of the year, Apple had been successful in its U.S. litigation campaign against Samsung. Apple convinced U.S. District Judge Lucy Koh in San Jose, California to impose two pretrial sales bans against Samsung — one against the Galaxy Tab 10.1, and the other against the Galaxy Nexus phone.

Apple then sought to keep up the pressure after its sweeping jury win. It asked Koh to impose a permanent sales ban against 26 mostly older Samsung phones, though any injunction could potentially have been extended to Samsung’s newer Galaxy products.

Yet the jury exonerated Samsung on the patent used to ban Galaxy Tab 10.1 sales, and Koh rescinded that injunction. Then, in October, a federal appeals court reversed Koh’s ban against the Nexus phone.

In her order late on Monday, Koh cited that appellate ruling as binding legal precedent, ruling that Apple had not presented enough evidence that its patented features drove consumer demand for the entire iPhone.

“The phones at issue in this case contain a broad range of features, only a small fraction of which are covered by Apple’s patents,” Koh wrote.

“Though Apple does have some interest in retaining certain features as exclusive to Apple,” she continued, “it does not follow that entire products must be forever banned from the market because they incorporate, among their myriad features, a few narrow protected functions.”

An Apple spokeswoman declined to comment on Koh’s ruling, and a Samsung representative could not immediately be reached.

In a separate order on Monday, Koh rejected a bid by Samsung for a new trial based on an allegation that the jury foreman was improperly biased in favor of Apple.

The case in U.S. District Court, Northern District of California is Apple Inc. vs. Samsung Electronics Co Ltd et al, 11-1846.

(Reporting by Dan Levine in Oakland, California; Editing by Ron Popeski)

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'The Hobbit' tops box office with record $84.6M

NEW YORK (AP) — Peter Jackson's "The Hobbit" led the box office over the weekend with $84.6 million, a record-setting opening better than the three previous "Lord of the Rings" films.

The 3-D Middle Earth epic, the first of three planned films adapted from J.R.R. Tolkien's novel, was the biggest December opening ever, surpassing Will Smith's "I Am Legend," which opened with $77.2 million in 2007.

The top 20 movies at U.S. and Canadian theaters Friday through Sunday, followed by distribution studio, gross, number of theater locations, average receipts per location, total gross and number of weeks in release, as compiled Monday by Hollywood.com are:

1. "The Hobbit: an Unexpected Journey," Warner Bros., $84,617,303, 4,045 locations, $20,919 average, $84,617,303, one week.

2. "Rise of the Guardians," Paramount, $7,143,445, 3,387 locations, $2,109 average, $71,085,268, four weeks.

3. "Lincoln," Disney, $7,033,132, 2,285 locations, $3,078 average, $107,687,319, six weeks.

4. "Skyfall," Sony, $6,555,732, 2,924 locations, $2,242 average, $271,921,795, six weeks.

5. "Life of Pi," Fox, $5,413,066, 2,548 locations, $2,124 average, $69,572,472, four weeks.

6. "The Twilight Saga: Breaking Dawn, Part 2," Summit, $5,136,074, 3,042 locations, $1,688 average, $276,826,143, five weeks.

7. "Wreck-It Ralph," Disney, $3,216,043, 2,249 locations, $1,430 average, $168,721,592, seven weeks.

8. "Playing For Keeps," FilmDistrict, $3,146,443, 2,840 locations, $1,108 average, $10,737,535, two weeks.

9. "Red Dawn," FilmDistrict, $2,408,882, 2,250 locations, $1,071 average, $40,904,305, four weeks.

10. "Silver Linings Playbook," Weinstein Co., $2,109,274, 371 locations, $5,685 average, $16,979,323, five weeks.

11. "Flight," Paramount, $1,910,666, 1,823 locations, $1,048 average, $89,418,704, seven weeks.

12. "Argo," Warner Bros., $1,170,175, 667 locations, $1,754 average, $104,955,079, 10 weeks.

13. "Hitchcock," Fox Searchlight, $1,107,659, 561 locations, $1,974 average, $3,071,871, four weeks.

14. "Anna Karenina," Focus, $1,022,214, 409 locations, $2,499 average, $8,380,517, five weeks.

15. "Killing Them Softly," Weinstein Co., $1,008,127, 1,427 locations, $706 average, $14,140,432, three weeks.

16. "The Collection," LD Entertainment, $529,158, 621 locations, $852 average, $6,520,794, three weeks.

17. "Hyde Park On Hudson," Focus, $292,796, 36 locations, $8,133 average, $404,816, two weeks.

18. "Taken 2," Fox, $288,772, 339 locations, $852 average, $138,132,493, 11 weeks.

19. "Pitch Perfect," Universal, $245,680, 332 locations, $740 average, $63,869,423, 12 weeks.

20. "Talaash," Reliance Big Pictures, $168,828, 113 locations, $1,494 average, $2,706,375, three weeks.

___

Universal and Focus are owned by NBC Universal, a unit of Comcast Corp.; Sony, Columbia, Sony Screen Gems and Sony Pictures Classics are units of Sony Corp.; Paramount is owned by Viacom Inc.; Disney, Pixar and Marvel are owned by The Walt Disney Co.; Miramax is owned by Filmyard Holdings LLC; 20th Century Fox and Fox Searchlight are owned by News Corp.; Warner Bros. and New Line are units of Time Warner Inc.; MGM is owned by a group of former creditors including Highland Capital, Anchorage Advisors and Carl Icahn; Lionsgate is owned by Lions Gate Entertainment Corp.; IFC is owned by AMC Networks Inc.; Rogue is owned by Relativity Media LLC.

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World Briefing | Science and Health: Lack of Funds Could Weaken Malaria Fight, Report Says

The world has made great progress against malaria in the last decade, but the fight is stalling for lack of funds, the World Health Organization’s annual report on malaria concluded on Monday. The amount spent on the disease by all countries rose to $1.8 billion last year, compared with $100 million in 2000, and, as a result, about one million children’s lives were probably spared over that time, the report said. But it would take $5 billion a year to get nets, insecticide spraying, diagnostic kits, effective drugs and hospital treatment to everyone needing them, and donor contributions, especially to the Global Fund to Fight AIDS, Tuberculosis and Malaria, have been nearly flat since 2010. Last year, the number of new nets purchased fell sharply, to 66 million from 145 million two years ago. Since nets wear out in three years and children are always being born, large numbers of infants and toddlers will soon be unprotected if more money does not come in, the report warned. The W.H.O. estimated that there were 219 million malaria cases in the world in 2010, with 660,00 deaths.

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Judge denies Apple's request to ban 26 Samsung phones

A federal judge late Monday denied Apple Inc.'s request for a permanent ban on 26 Samsung Electronics Co. smartphones that a jury had found infringed on Apple patents for the iPhone and the iPad.

But U.S. District Judge Lucy Koh also rejected Samsung's motion for a new trial based on jury misconduct.

The rulings were part of a series of decisions Koh has been making on motions both sides have brought since Apple won a $1-billion jury verdict last summer.

PHOTOS: Devices in the Apple Samsung trial

Koh noted that the infringing technology amounted to a small portion of the Samsung products' functionality. Blocking sale of the smartphones — including the Fascinate, Epic 4G and Galaxy SII — on these grounds would unfairly deprive consumers of the right to buy them, she wrote.

Koh also ruled against Samsung's request to have the verdict tossed out amid allegations that the jury foreman should not have been allowed to participate because he had previously been involved in patent litigation.

Both sides are expected to appeal.

PHOTOS: Devices in the Apple Samsung trial

Separately, Apple has filed a second patent-infringement case against Samsung, alleging that the South Korean company's newer phones violate Apple patents. That case, also pending before Koh, isn't expected to go to trial until 2014.

During a hearing on the motions this month, Koh urged each side to reach a global settlement of their claims. But there has been no sign that either company is willing to back down from legal battles now lodged in courtrooms and with regulatory agencies worldwide.

Apple spokeswoman Kristin Huguet said the company had no comment on the ruling. A Samsung representative had not responded to a request for comment Monday night.

chris.obrien@latimes.com

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A collection that identifies California as a world apart

PALO ALTO — Something was unusual about the 1663 map of the Western Hemisphere.

Yes, much of the North and South American coasts followed contours geographers would recognize today. And in California, Santa Catalina, Santa Barbara and Point Reyes were clearly marked. But wait! What was that body of water marked Mare Vermiglio, or Red Sea, separating California from the mainland? And why was California a big carrot-shaped island?

That geographic oddity caught the attention of Glen McLaughlin, an American businessman who was browsing through antique maps at a shop in London in 1971. He bought it — and began pursuing a quirky and expensive passion that would lead him to devote an entire room in his San Jose-area home to what is believed to be the largest private collection of such maps.

"It was not a very pretty map, but it had the concept that California was a very different place, a special place," McLaughlin recalled about that first purchase.

Four decades later, his collection of 800 maps, all showing California as an island, is making a splash in academia. And to both California lovers and haters, it promotes the sentiment that the state, even if not a physical island, remains a cultural and political one.

McLaughlin recently turned his collection over to Stanford University's Branner earth sciences library in an arrangement that was part sale, part donation. It is thought to be worth $2.1 million.

An Oklahoman who found a new home and success as a Silicon Valley venture capitalist, McLaughlin became intrigued with 17th and 18th century depictions of California as a mysterious island of riches and, he said, "hope for the future."

From early exploration to Gold Rush days to the current high-tech era, California has been a kind of island of freedom and innovation, he said. "There is enormous tolerance for different points of view. So inventors, who might be called kooks or nuts someplace else were embraced here and encouraged," said McLaughlin, a hearty 77. It is, he added, "the grandest place on Earth."

The maps and an online repository are expected to enrich scholars' knowledge of the first California experiences by European explorers. Spurred in part by imaginary descriptions in an early 16th century novel, Spanish travelers originally searched for an island supposedly populated by cannibalistic Amazons with plentiful jewels and gold. It took two more centuries to refute that and other island theories.

The collection shows "layer upon layer of history," said Julie Sweetkind-Singer, a Stanford map librarian. "It shows the perceptions of the times and the idea of exploration and finding new worlds." In their day, the maps excited people the way images from the Hubble Space Telescope do today, she added.

Among the first to study the maps intensively will be author and geography expert Rebecca Solnit, whose 2010 book, "Infinite City: A San Francisco Atlas," mapped that city for such things as Native American place names, contemporary murders and coffeehouses. She soon will start a six-month fellowship at Stanford with the goal of writing a book based on the McLaughlin collection.

Although the maps are technically wrong, their symbolism remains powerful, she said.

"California is not an island and doesn't have an east coast and no Vermilion Sea. But it is so separate from other parts of the United States, economically, culturally and even spatially," Solnit said. With mountains and deserts isolating California, and its agriculture, high-tech and entertainment industries so well developed, "who's to say we are not this magical, amazing place?"

The maps, she added, "show this weird kind of dance between imagination and desire on the one hand and exploration and fact on the other."

McLaughlin said he has cartography in his DNA. His great-grandfather was a surveyor, his father once won a school contest in drawing maps, and McLaughlin himself was an Air Force pilot trained in navigation. He fell in love with Northern California when stationed there in the late 1950s and returned as a civilian to its high-tech and finance industries. Among other positions, he was a co-founder of Greater Bay Bancorp, a large bank that was acquired by Wells Fargo.

Not a golfer or one for the party circuit, he fell into his map habit as quiet relief from the financial minutiae of his work and the stress of dealing with the computer world's "bits and bytes."

It also gave him entree to the rarefied world of scholars and collectors, where the mistaken island images, like misprinted postage stamps, "always draw more attention than the run of the mill," said McLaughlin, an unexcitable man who recounts his map acquisitions like a retired professor recalling good students of the past.

The growing size of his collection sometimes exasperated his wife, Ellen. At first he stored them under a bed, but that made them difficult to protect from the family cat. He then acquired architects' cases and eventually moved them to a dedicated study in a 10-room house in Saratoga. With part-time helpers, he produced well-regarded essays and catalogs on his collection and UC Berkeley's.

Recently, he and his wife moved to a smaller home nearby, pared their possessions and arranged the transfer to Stanford. The collection is expected to move across campus in 2014 to a center that will be created at the university's main Green Library; the space will be named after David Rumsey, a real estate developer who is donating his immense collection of 18th and 19th century Western Hemisphere maps and atlases.

McLaughlin's maps, carefully stored in Mylar sleeves or framed behind glass, display beautiful curiosities. His first, in English and Latin, shows sea monsters and galleons in the oceans. A 1656 French one gives "Californie Isle" a foot-like northern coast with five peninsula toes. A 1670 Dutch version shows angels on top and below a bare-chested Native American chief with snakes and bars of gold.

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