‘Homeland’ star Claire Danes gives birth to first child

LOS ANGELES (Reuters) – Emmy-winning actress Claire Danes has given birth to her first child, a boy, the publicist for the “Homeland” star said on Wednesday.

Cyrus Michael Christopher Dancy was born on Monday to Danes, 33, and her husband, British actor Hugh Dancy.

Danes’ performance as CIA operative Carrie Matheson on Showtime’s “Homeland” series scored her an Emmy win in September, while the psychological thriller won the TV industry’s highest honor of best drama series.

Danes is nominated for her second Golden Globe award in the role at the Hollywood awards show in January. She also has won multiple awards for her past work on 2010 TV film “Temple Grandin,” and as a 15-year-old on the 1990s coming-of-age television drama “My So-Called Life.”

(Reporting by Eric Kelsey, editing by Jill Serjeant and Lisa Shumaker)

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Stigma Fading, Marijuana Common in California

Jim Wilson/The New York Times

At a San Francisco concert in 2010, marijuana use was general while signatures were collected for a measure to decriminalize it.

LOS ANGELES — Let Colorado and Washington be the marijuana trailblazers. Let them struggle with the messy details of what it means to actually legalize the drug. Marijuana is, as a practical matter, already legal in much of California.

No matter that its recreational use remains technically against the law. Marijuana has, in many parts of this state, become the equivalent of a beer in a paper bag on the streets of Greenwich Village. It is losing whatever stigma it ever had and still has in many parts of the country, including New York City, where the kind of open marijuana use that is common here would attract the attention of any passing law officer.

“It’s shocking, from my perspective, the number of people that we all know who are recreational marijuana users,” said Gavin Newsom, the lieutenant governor. “These are incredibly upstanding citizens: Leaders in our community, and exceptional people. Increasingly, people are willing to share how they use it and not be ashamed of it.”

Marijuana can be smelled in suburban backyards in neighborhoods from Hollywood to Topanga Canyon as dusk falls — what in other places is known as the cocktail hour — often wafting in from three sides. In some homes in Beverly Hills and San Francisco, it is offered at the start of a dinner party with the customary ease of a host offering a chilled Bombay Sapphire martini.

Lighting up a cigarette (the tobacco kind) can get you booted from many venues in this rigorously antitobacco state. But no one seemed to mind as marijuana smoke filled the air at an outdoor concert at the Hollywood Bowl in September or even in the much more intimate, enclosed atmosphere of the Troubadour in West Hollywood during a Mountain Goats concert last week.

Arnold Schwarzenegger, the former Republican governor, ticked off the acceptance of open marijuana smoking in a list of reasons he thought Venice was such a wonderful place for his morning bicycle rides. With so many people smoking in so many places, he said in an interview this year, there was no reason to light up one’s own joint.

“You just inhale, and you live off everyone else,” said Mr. Schwarzenegger, who as governor signed a law decriminalizing possession of small amounts of marijuana.

Some Californians react disdainfully to anyone from out of state who still harbors illicit associations with the drug. Bill Maher, the television host, was speaking about the prevalence of marijuana smoking at dinner parties hosted by Sue Mengers, a retired Hollywood agent famous for her high-powered gatherings of actors and journalists, in an interview after her death last year. “I used to bring her pot,” he said. “And I wasn’t the only one.”

When a reporter sought to ascertain whether this was an on-the-record conversation, Mr. Maher responded tartly: “Where do you think you are? This is California in the year 2011.”

John Burton, the state Democratic chairman, said he recalled an era when the drug was stigmatized under tough antidrug laws. He called the changes in thinking toward marijuana one of the two most striking shifts in public attitude he had seen in 40 years here (the other was gay rights).

“I can remember when your second conviction of having a single marijuana cigarette would get you two to 20 in San Quentin,” he said.

In a Field Poll of California voters conducted in October 2010, 47 percent of respondents said they had smoked marijuana at least once, and 50 percent said it should be legalized. The poll was taken shortly before Californians voted down, by a narrow margin, an initiative to decriminalize marijuana.

“In a Republican year, the legalization came within two points,” said Chris Lehane, a Democratic consultant who worked on the campaign in favor of the initiative. He said that was evidence of the “fact that the public has evolved on the issue and is ahead of the pols.”

A study by the California Office of Traffic Safety last month found that motorists were more likely to be driving under the influence of marijuana than under the influence of alcohol.

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DealBook: Exchange Sale Reflects New Realities of Trading

On a warm day in Boca Raton, Fla., the host of a reception for an annual financial conference was not a big bank or a powerful exchange as in years past, but a young firm based in Atlanta.

Guests who gathered at the oceanfront resort were surprised. They were greeted with bottled ice water that carried the company’s logo, and as they left, were invited to grab iPod Shuffles.

That event, some four years ago, was the Wall Street equivalent of a coming-out party for the firm, IntercontinentalExchange, or ICE, an electronic operator of markets for derivatives and commodities. Now, the markets upstart is announcing itself to a much larger world with an $8.2 billion deal to buy the symbolic cradle of American capitalism, the New York Stock Exchange.

The takeover illustrates starkly how trading in commodities and derivatives has become much more lucrative than trading in the shares of companies. Warren E. Buffett warned in 2003 that the “derivatives genie is now well out of the bottle,” and that the genie, even after a global financial crisis, was not going back. Currently, derivatives — financial bets tied to underlying assets like oil prices or interest rates, among other things — are a $600 trillion market. Even the parent of the N.Y.S.E. attracted its suitor largely because of its ownership of Liffe, a major derivatives exchange in London.

For many, the Beaux-Arts New York Stock Exchange, and images of traders looking despondent or exuberant on its floor, represent what making money is all about. Yet Wall Street itself has found it more profitable to bet on fluctuations in natural gas or corn or on interest rates. The financial industry often does so electronically and through platforms in cities as scattered as London, Chicago and Atlanta. The biggest bonuses each year are typically for traders who reaped rich gains on these often complex financial products.

That change, decades in the making, has left the New York exchange, with roots going back 220 years, in an increasing difficult position as trading volumes slump and profit margins stay razor thin. While its acquirer has pledged to keep a dual headquarters in the exchange building in Lower Manhattan, as well as in Atlanta, the center of power in finance long ago migrated elsewhere.

The success of the newly combined companies hinges on the derivatives business. ICE is hoping that a greater share of derivatives trading will go through its clearinghouse operations, which act as backstops in case one party defaults. It is being aided by the Dodd-Frank financial regulatory overhaul, which is forcing Wall Street banks to push their derivatives trades into clearinghouses and regulated exchanges.

“For the past decade, our solutions made our markets increasingly electronic and increasingly clear,” Jeffrey C. Sprecher, chief executive of ICE, said this month. “Today, financial reform is imposing that vision on many markets through a rule-making process.”

While Dodd-Frank compliance is still in its early days, and the volume of derivatives trading remains depressed amid broader economic uncertainty, the law is ultimately expected to cement ICE’s business model into the regulatory code.

“Despite the complaints, there’s no question that at the end of the day, Dodd-Frank will be a financial boon to exchanges,” said Bart Chilton, a Democratic member of the Commodity Futures Trading Commission, which regulates derivatives.

Still, such a development will not do much for the traditional business of the New York Stock Exchange. Mr. Sprecher said on Thursday that he was committed to keeping the floor of the exchange open. But according to people briefed on his plans, he intends to use the stock trading operation and its steady cash-generating abilities to finance future deals and expansion efforts.

Nowhere have the changing fortunes of ICE and the parent of the New York exchange, NYSE Euronext, been more apparent than in their value on the stock market. In April 2011, when ICE first tried to acquire NYSE Euronext in league with Nasdaq OMX, it was worth about $1.5 billion less than the New York company. Just over a year later, ICE was worth nearly $4 billion more than NYSE Euronext, even with less than a third of its revenue.

ICE was founded in 2000 by Mr. Sprecher, who began his career developing power plants. In the 1990s, he saw that many power companies and financial firms wanted to hedge their investments in energy with financial contracts, but the market for these contracts was disorganized and opaque.

Mr. Sprecher bought an obscure exchange for buying and selling electricity in Atlanta and turned it into ICE with financing from BP and Wall Street firms, including Goldman Sachs and Morgan Stanley.

Banks were drawn to the idea of a standardized place to buy and sell derivatives tied to the value of oil and other commodities. But they also hoped to create a competitor to the virtual monopoly position being built up by the Chicago Mercantile Exchange in futures trading.

“You talk to people in Chicago, they basically think that ICE is just a front for the banks,” said Craig Pirrong, an expert in futures trading and director of the Global Energy Management Institute at the University of Houston.

As the company grew through a quick series of acquisitions, Mr. Sprecher won a reputation for being the “enfant terrible” of the energy industry, with a “sharp eye for identifying opportunities and seizing on them in a very aggressive way,” Dr. Pirrong said.

Early on, ICE sought to move all trading onto computers, allowing firms to buy and sell contracts 24 hours a day. Soon after buying the International Petroleum Exchange in London, ICE shut down its trading floor.

“They were a technology company from Day 1,” said Brad Hintz, an analyst with Sanford C. Bernstein.

ICE also decided to fashion its own clearinghouse, rather than tap an outsize firm. It expanded through acquisitions, planting the seeds for growth in 2008, when it took over the Clearing Corporation, home to a popular derivative known as a credit-default swap.

The Dodd-Frank overhaul may provide additional benefits for ICE. Under the law, exchanges must turn over public and private information to outside data warehouses, which will, in turn, share the information with regulators. Sensing an opportunity, ICE created its own warehouse, named ICE Trade Vault.

ICE and its Chicago rival, CME Group, have also moved in recent months to convert swaps trades, which are facing more scrutiny under Dodd-Frank, into old-fashioned futures contracts. Futures trading is lucrative territory for the exchanges in part because they can shut out competitors.

“The reality is that there are incentives to convert swaps into futures, where there’s less competition,” said Richard M. McVey, chief executive of MarketAxess, an independent trading platform that is expanding into the swaps business. “There’s no requirement for CME and ICE to open their futures clearinghouses to other exchanges.”

Despite its growing prominence, ICE has a small footprint in Washington. With only two full-time lobbyists, the company relies on Mr. Sprecher to communicate with regulators.

“Jeff is the company,” one official said, though others said he had loosened his grip over the last year or so.

He is well received, officials say, in part because he has embraced some reforms. Unlike executives of other exchanges and financial firms, Mr. Sprecher did not resist an effort in 2009 by the Commodity Futures Trading Commission to close certain loopholes.

Officials recall him saying, “Tell me what the rules are, and I’ll make money with them.”

Michael J. de la Merced contributed reporting.

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New chief of California's prisons named

SACRAMENTO — Gov. Jerry Brown on Wednesday named a vocal advocate of shorter sentences and community treatment to run the state's crowded and troubled prison system.

Brown announced the selection of Jeffrey Beard, 65, the retired former Pennsylvania prisons chief, to succeed Matthew Cate, who stepped down last month after four years as secretary of corrections in California. Cate is now leader of the California State Assn. of Counties.

Beard, whose appointment is subject to Senate confirmation, spent nearly four decades in corrections in Pennsylvania, starting as a counselor and advancing to prison warden, eventually spending nine years as department head. He completed an expansion of that state's prison system, including the addition of 32,000 inmate beds.

He left in 2010, advocating for laws that put more criminals into work-treatment programs instead of prisons, telling lawmakers that an "over-reliance" on locking up non-serious offenders did little to improve public safety.

Though an official start date was not announced, Beard joins Brown's administration at a critical time. The Department of Corrections and Rehabilitation has until Jan. 7 to produce a plan for reducing prison crowding or face the renewed threat of federal orders to release inmates early.

In addition, a federal receiver is attempting to negotiate terms for California to resume control over the delivery of healthcare to inmates. And the parole and healthcare divisions are laying off staff.

In announcing the appointment, Brown said Beard "has arrived at the right time to take the next steps in returning California's parole and correctional institutions to their former luster."

Beard's successor in Pennsylvania says Beard will fit right in.

"I think you guys hit a home run," said Pennsylvania Corrections Secretary John Wetzel.

Wetzel, who was appointed eight months after Beard retired, said the former director weighed in frequently with crucial advice and provided input on new legislation intended to reduce prison crowding in that state and on expanding community treatment and diversion programs.

In 2008, Beard lent support to a proposal to ease county jail crowding by sending felons serving more than two years to state prison. But it allowed for medical release and early release of nonviolent offenders who completed treatment and education programs.

Andy Hoover, legislative director for the Pennsylvania branch of the American Civil Liberties Union, said Beard played an active role in developing corrections policies and promoting them before the Legislature.

But Beard has critics as well, some of whom hold him responsible for expanding the use of solitary confinement in Pennsylvania and for a two-month moratorium on parole releases after the murders of two Philadelphia police officers. The moratorium caused such overcrowding that Pennsylvania began sending inmates to serve time in other states.

Hoover said Beard was caught in a political bind, carrying out policies he had not set. "He was in an unfortunate position," Hoover said. "It was very much out of his hands."

Corrections historian Dan Berger, who was working on his doctoral degree at the University of Pennsylvania at the time, disagrees.

"Beard does not have a good reputation on health and human rights in prison," Berger said. "He gives more rhetoric to sentencing reform than believes it."

After retiring in 2010, Beard joined Pennsylvania State University's Justice Center for Research, and he has worked as a private consultant to a number of states, including California. He advised Sacramento on litigation over the care and housing of mentally ill offenders and has toured California prisons.

Beard is not shy about voicing opinions on where the criminal justice system fails. In 2010, he told Pennsylvania lawmakers that heavy reliance on incarceration of low-level offenders "has proven to have limited value in maintaining public safety."

"We must stop treating all offenders the same and move away from the 'get tough on crime' philosophy of locking up less serious offenders for longer periods of time," he told them.

In a 2005 commentary in an industry publication, Beard called for a rethinking of "who really belongs in prison" and an end to the then-popular "scared straight" programs he felt increased the likelihood that freed inmates would commit future crimes. "We must have the will to put an end to feel-good and/or publicly popular programs that simply do not work," Beard wrote.

Corrections officials said Beard was unavailable Wednesday but released a single statement quoting the incoming secretary as saying he was "honored" to be appointed "for this important public safety position."

paige.stjohn@latimes.com

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Patent Office to Review Apple's Document-Scrolling Patent

The U.S. Patent and Trademark Office has ruled that a patent that’s central to the epic Apple v. Samsung intellectual property lawsuit is subject to reexamination, which could lead to portions of the patent — but probably not all of it — being invalidated.

Patent No. 7,844,915, referred to as the ’915 patent, covers document scrolling. The patent office rejected all 21 claims of the patent, which means it is up for scrutiny — but it is unlikely that the patent would be invalidated in its entirety. Eighty-nine percent of patents subject to reexamination survive in some form or another, Brian Love, an assistant professor of law at Santa Clara University School of Law, has told Wired.

Just last week another Apple patent holding, a multi-touch related patent dubbed the “Steve Jobs” patent, was also tentatively invalidated. We saw the same thing in October with Apple’s so-called “rubber-banding patent.” In each case, the patent is merely being reexamined.

However, should a patent examiner determine a patent is invalid, it could have a significant effect on the damages Samsung owes Apple in the Apple v. Samsung case — a jury trial determined that 19 Samsung smartphones violated this particular patent. Judge Koh has already denied Apple a permanent injunction against infringing Samsung devices.

Samsung submitted the filing to Judge Lucy Koh as part of ongoing post-trial decisions in the two companies’ multi-faceted intellectual property battles. If the patent survives, but adjustments need to be made in order for it to be valid, it’s also bad news for Apple.

“If Apple has to amend its claims to salvage the patent, it will not be able to recover damages for allegedly infringing activity that took place before the patent was amended,” Love told Wired December 7. In layman’s terms: Samsung would still be off the hook for this patent in Apple v. Samsung.

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Leah Remini sued by former managers over “Family Tools” commissions

LOS ANGELES (TheWrap.com) – Leah Remini‘s new TV gig is already giving her a headache, months before it even starts. Former “King of Queens” star Remini is being sued by her former managers, the Collective Management Group, which claims that it’s owed $ 67,000 in commissions relating to her upcoming ABC comedy “Family Tools,” which debuts May 1.

In a complaint filed with Los Angeles Superior Court on Tuesday, the Collective says that it entered into an agreement with the actress in November 2011 that guaranteed the company 10 percent of the earnings that emerged from projects that Remini “discussed, negotiated, contemplated, or procured/booked during Plaintiff’s representation of Remini,” regardless of whether the income was earned after she and the Collective parted ways.

According to the lawsuit, that would include the $ 1 million that it says Remini will earn for the first season of “Family Tools.” (The suit allows that it isn’t owed commission on a $ 330,000 talent holding fee that Remini received from ABC prior to officially being booked on the show.)

Remini, pictured above wearing the self-satisfied smirk of someone who just might stiff her former managers out of their commission, terminated her agreement with the Collective “without warning or justification” in October, the suit says.

Alleging breach of oral contract among other charges, the suit is asking for an order stipulating that it’s owed the $ 67,000, plus unspecified damages, interest and court costs.

Remini’s agent has not yet responded to TheWrap’s request for comment.

(Pamela Chelin contributed to this report)

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U.N. Suspends Polio Campaign in Pakistan After Killings of Workers

B.K. Bangash/Associated Press

A Pakistani woman administered polio vaccine to an infant on Wednesday in the slums of Islamabad. Militants have killed eight polio workers over three days.

LAHORE, Pakistan — The front-line heroes of Pakistan’s war on polio are its volunteers: young women who tread fearlessly from door to door, in slums and highland villages, administering precious drops of vaccine to children in places where their immunization campaign is often viewed with suspicion.

Now, those workers have become quarry. After militants stalked and killed eight of them over the course of a three-day, nationwide vaccination drive, the United Nations suspended its anti-polio work in Pakistan on Wednesday, and one of Pakistan’s most crucial public health campaigns has been plunged into crisis.

The World Health Organization and Unicef ordered their staff members off the streets, while government officials reported that some polio volunteers — especially women — were afraid to show up for work.

At the ground level, it is those female health workers who are essential, allowed privileged entrance into private homes to meet and help children in situations denied to men because of conservative rural culture. “They are on the front line; they are the backbone,” said Imtiaz Ali Shah, a polio coordinator in Peshawar.

The killings started in the port city of Karachi on Monday, the first day of a vaccination drive aimed at the worst affected areas, with the shooting of a male health worker. On Tuesday four female polio workers were killed, all gunned down by men on motorcycles in what appeared to be closely coordinated attacks.

The hit jobs then moved to Peshawar, the capital of Khyber-Pakhtunkhwa Province, which, along with the adjoining tribal belt, constitutes Pakistan’s main reservoir of new polio infections. The first victim there was one of two sisters who had volunteered as polio vaccinators. Men on motorcycles shadowed them as they walked from house to house. Once the sisters entered a quiet street, the gunmen opened fire. One of the sisters, Farzana, died instantly; the other was uninjured.

On Wednesday, a man working on the polio campaign was shot dead as he made a chalk mark on the door of a house in a suburb of Peshawar. Later, a female health supervisor in Charsadda, 15 miles to the north, was shot dead in a car she shared with her cousin.

Yet again, Pakistani militants are making a point of attacking women who stand for something larger. In October, it was Malala Yousafzai, a schoolgirl advocate for education who was gunned down by a Pakistani Taliban attacker in the Swat Valley. She was grievously wounded, and the militants vowed they would try again until they had killed her. The result was a tidal wave of public anger that clearly unsettled the Pakistani Taliban.

In singling out the core workers in one of Pakistan’s most crucial public health initiatives, militants seem to have resolved to harden their stance against immunization drives, and declared anew that they consider women to be legitimate targets. Until this week, vaccinators had never been targeted with such violence in such numbers.

Government officials in Peshawar said that they believe a Taliban faction in Mohmand, a tribal area near Peshawar, was behind at least some of the shootings. Still, the Pakistani Taliban have been uncharacteristically silent about the attacks, with no official claims of responsibility. In staying quiet, the militants may be trying to blunt any public backlash like the huge demonstrations over the attack on Ms. Yousafzai.

Female polio workers here make for easy targets. They wear no uniform but are readily recognizable, with clipboards and refrigerated vaccine boxes, walking door to door. They work in pairs — including at least one woman — and are paid just over $2.50 a day. Most days one team can vaccinate 150 to 200 children.

Faced with suspicious or recalcitrant parents, their only weapon is reassurance: a gentle pat on the hand, a shared cup of tea, an offer to seek religious assurances from a pro-vaccine cleric. “The whole program is dependent on them,” said Mr. Shah, in Peshawar. “If they do good work, and talk well to the parents, then they will vaccinate the children.”

That has happened with increasing frequency in Pakistan over the past year. A concerted immunization drive, involving up to 225,000 vaccination workers, drove the number of newly infected polio victims down to 52. Several high-profile groups shouldered the program forward — at the global level, donors like the Bill and Melinda Gates Foundation, the United Nations and Rotary International; and at the national level, President Asif Ali Zardari and his daughter Aseefa, who have made polio eradication a “personal mission.”

On a global scale, setbacks are not unusual in polio vaccination campaigns, which, by dint of their massive scale and need to reach deep inside conservative societies, end up grappling with more than just medical challenges. In other campaigns in Africa and South Asia, vaccinators have grappled with natural disaster, virulent opposition from conservative clerics and sudden outbreaks of mysterious strains of the disease.

Declan Walsh reported from Lahore, and Donald G. McNeil Jr. from New York. Ismail Khan contributed reporting from Peshawar, Pakistan.

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DealBook: Leniency Denied, UBS Unit Admits Guilt in Rate Case

UBS on Wednesday became the first big global bank in more than two decades to have a subsidiary plead guilty to fraud.

UBS, the Swiss bank, scrambled until the last minute to avoid that fate. A week ago, in a bid for leniency over interest-rate manipulation, the bank’s chairman traveled to Washington to plead his case to the Justice Department, according to people briefed on the matter. Knowing the long odds, the chairman, Axel Weber, asked the criminal division for a lighter punishment.

But the government did not budge. With support from Attorney General Eric H. Holder Jr., the agency’s criminal division decided the bank’s actions were simply too egregious, people briefed on the matter said.

On Wednesday, UBS announced it would plead guilty to one count of felony wire fraud as part of a broader settlement. With federal prosecutors, British, Swiss and American regulators secured about $1.5 billion in fines, more than triple the only other rate-rigging case, against Barclays. The Justice Department also filed criminal charges against two former UBS traders.

The guilty plea and the individual charges provide the Justice Department with a long-awaited case to prove it is taking a hard line against financial wrongdoing.

Since the financial crisis, the government has faced criticism that it has not brought significant criminal actions. The money-laundering case against HSBC, which averted indictment when it agreed instead last week to pay $1.9 billion, raised more concerns that the world’s largest and most interconnected banks were too big to indict.

With UBS, prosecutors wanted to send a warning.

The Justice Department’s decision stops short of imperiling the broader financial system because it shields UBS’s parent company from losing its charter, among other major repercussions. But by securing a guilty plea against a subsidiary, the department has shown that it is willing to punish severely one of the world’s most powerful banks. It was the first guilty plea from a major financial institution since Drexel Burnham Lambert admitted to six counts of fraud in 1989.

“We are holding those who did wrong accountable,” Lanny A. Breuer, the head of the Justice Department’s criminal division, said at a news conference on Wednesday. “We cannot, and we will not, tolerate misconduct on Wall Street.”

The rate-rigging inquiry, which has ensnared more than a dozen big banks, is focused on major benchmarks like the London interbank offered rate, or Libor. Such rates are central to determining the borrowing rates for trillions of dollars of financial products like corporate loans, mortgages and credit cards.

The fallout from the UBS case is expected to increase pressure on some of the world’s largest financial institutions and spur settlement talks across the banking industry. The Royal Bank of Scotland has said it expects to pay fines before its next earnings statement in February, while American institutions, including JPMorgan Chase, also remain in regulators’ cross hairs.

The UBS case highlighted a pattern of abuse that authorities have uncovered in a multiyear investigation into the rate-setting process. The government complaints laid bare a 10-year scheme, describing how the bank had reported false rates to squeeze out extra profits and deflect concerns about its health during the financial crisis.

“The settlement reflects the magnitude of the wrongdoing and how critical it is that these be honest and reliable,” said Gary S. Gensler, chairman of the Commodity Futures Trading Commission, the American regulator that opened the UBS investigation.

Six months ago, authorities did not seem ready to take an aggressive stance with UBS.

They had just scored their first Libor settlement, a $450 million payout from Barclays. UBS, which had already struck a conditional immunity deal with the Justice Department’s antitrust division, figured its penalty would be similar.

The immunity deal, some UBS executives contended, would protect the bank from criminal charges. Even officials at the Justice Department were skeptical about the prospect of levying large penalties, according to people briefed on the matter.

Then the tone shifted this fall. After examining thousands of e-mails and hours of taped phone calls, the agency’s criminal division concluded that the conduct at the Japanese subsidiary warranted a criminal charge.

Agency officials also cited the bank’s repeated run-ins with authorities. For example, the Swiss bank had agreed in 2009 to pay $780 million to settle charges that it had helped clients avoid taxes.

Not everyone in the Justice Department agreed on the course of action. According to people briefed on the matter, the antitrust unit pushed for less-onerous penalties, citing the cooperation of UBS. With officials split over how to proceed, Mr. Holder cast the deciding vote in favor of securing a guilty plea from the subsidiary.

The move caught UBS off guard. The bank dispatched dozens of lawyers to Washington to negotiate the fine print of the deal, setting up makeshift offices at the Four Seasons hotel in Georgetown.

Mr. Weber joined the lawyers, in a typical last-ditch appeal to the criminal division. Last Wednesday, Mr. Weber and his general counsel explained to the agency how UBS had overhauled its management ranks, bolstered internal controls and generally tried to clean up its act.

Mr. Breuer and other Justice Department officials agreed to consider the bank’s request to abandon the guilty plea, people briefed on the talks said. But hours later, a prosecutor phoned to say the agency was standing firm.

UBS agreed to the guilty plea, conceding that the Japanese unit would otherwise most likely face an indictment. In turn, prosecutors credited the bank for its recent efforts to improve.

“We are pleased that the authorities gave us credit for the important and positive changes we have already made,” Mr. Weber said in a statement.

The Commodity Futures Trading Commission adopted a similarly tough attitude.

Since Thanksgiving, UBS has tried to negotiate lower penalties with the regulator, according to people briefed on the matter. But David Meister, the agency’s enforcement chief, would not back down from $700 million in fines, an agency record.

“Even for a megabank, that amount serves as a direct deterrent,” said Bart Chilton, a commissioner at the regulator.

Authorities’ strict stance stems from the extent of the bank’s actions. The Commodity Futures Trading Commission cited more than 2,000 instances of illegal acts involving dozens of UBS employees across continents.

The most significant wrongdoing took place within the Japanese unit, where traders colluded with other banks and brokerage firms to tinker with yen-denominated Libor and bolster their returns.

In colorful e-mails, instant messages and phone calls, traders tried to influence the rates. “I need you to keep it as low as possible,” one UBS trader said to an employee at another brokerage firm, according to the complaint filed by the Financial Services Authority of Britain.

As the employees carried out the ostensible manipulation, they also celebrated the efforts, with one trader referring to a partner in the scheme as “superman.” “Be a hero today,” he urged, according the complaint.

The Justice Department also took aim at two former UBS traders, Tom Hayes, 33, and Roger Darin, 41, bringing the first criminal charges against individuals connected to the Libor case.

Like other traders at UBS, Mr. Hayes was willing to reward others for their efforts. He trumpeted the work of an outside broker who had helped, writing in a message, “i reckon i owe him a lot more.” Another broker responded that the person was “ok with an annual champagne shipment,” and “a small bonus every now and then.”

As prosecutors ramped up their investigation, Mr. Hayes even tried to dissuade former colleagues from cooperating, the complaint said. “The U.S. Department of Justice, mate, you know,” he said, they are the “dudes who…put people in jail. Why…would you talk to them?”

Mark Scott, Ashley Southall and Julia Werdigier contributed reporting.

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California senators propose tighter gun laws after Newtown deaths

SACRAMENTO — A group of California lawmakers responded Tuesday to the mass shooting in Newtown, Conn., with a series of proposals to further control access to weapons, including mandatory permits with fees and background checks for anyone who wants to buy bullets.

Tougher gun permit and safety measures, as well as a plan to close a loophole in the state's assault weapons ban, were also proposed.

California has been fighting in court for years with the National Rifle Assn. and other groups over an earlier, landmark law to restrict handgun ammunition sales. The state has been unable to enforce the law since 2010 because of the litigation.

"For too long, too much ground has been ceded in this debate about reasonable gun and ammunition control," said Sen. Kevin De Leon, chairman of the Senate Democratic Caucus.

The Democrat from Los Angeles is leading the effort for new regulations on ammunition sales, which he said Tuesday would be dedicated to those killed at Sandy Hook Elementary School. "We must not capitulate any longer."

He said his new proposal addresses concerns raised by the courts that the existing law does not clearly define what constitutes handgun ammunition.

The rules proposed by De Leon would apply to ammunition for all guns.

California lawmakers have repeatedly implemented strict rules on gun ownership despite the state's large population of hunters and recreational shooters, and constant wrangling with the NRA.

The nonprofit Brady Campaign to Prevent Gun Violence, which lobbies for restrictions on firearm ownership, ranks California No. 1 among states.

Bans on assault weapons and ammunition clips holding more than 10 rounds, as well as a strong background check requirement, retention of records on gun buyers and a 10-day waiting period for purchasing firearms helped earn California the distinction.

De Leon wants an annual permit fee of up to $50 to pay for felony and mental illness background checks. Those buying ammunition on the Internet would have to collect the bullets at a gun store, where the permit would be required.

C.D. Michel, the lawyer who filed the lawsuit on behalf of the California Rifle and Pistol Assn. Foundation — the NRA's California affiliate — said Tuesday that the senator's latest proposal might also be illegal.

"You can't tax the exercise of a fundamental constitutional right," he said.

Others questioned the effectiveness of the proposed law.

"Anybody who wants to can drive to Reno or Las Vegas or Oregon and buy all the ammunition they want and bring it back to California," said Sam Paredes, executive director of the advocacy group Gun Owners of California.

Gov. Jerry Brown has not always embraced anti-gun legislation. He vetoed a measure lawmakers passed last year aimed at addressing the legal issues bedeviling the existing restrictions on ammunition purchases.

"Let's keep our powder dry … until the court case runs its course," Brown wrote in his veto message.

De Leon said the politics of such bills had changed with the Connecticut shooting.

"They were mowed down," he said of the Newtown children. "I think that viscerally it will give a lot of political officials around the country the political courage to do the right thing."

Los Angeles and Sacramento require fingerprinting of ammunition buyers. The Sacramento Police Department found that 349 felons and other prohibited buyers purchased ammunition in that city from 2008 to 2011. Officers were able to go after the violators.

State Sen. Leland Yee (D-San Francisco) this week proposed three gun-control bills, including one prohibiting devices on semiautomatic weapons that allow them to be easily reloaded with multiple rounds of ammunition.

He also proposed requiring yearly registration and background checks for gun ownership, rather than just at the time of purchase. Yee also proposed that all guns have a locked trigger and be properly stored in a lock box when not in use.

Republican Sen. Ted Gaines of Roseville announced Tuesday his proposal to permanently ban from owning guns mentally ill people whom a court deems to be a danger to others.

Gaines said current law allowed those people to regain the right to possess firearms if they completed treatment.

patrick.mcgreevy@latimes.com

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Army Says This General Sexually Abused an Officer, Then Threatened Her Career

An Army general isn’t just accused of sexually assaulting a female subordinate. According to newly released military documents, the one-star general ”threaten[ed] to use his rank, position, and authority to damage or ruin [the captain's] military career if she ended their sexual relationship.” And he disobeyed a direct order from his superior officer to leave the female officer alone.

Army Brig. Gen. Jeffrey Sinclair, the former deputy commander of the 82nd Airborne Division, “received a lawful command from Major General (O-8) James L. Huggins,” then Sinclair’s superior officer, to cease contact with an unnamed female Army captain that Sinclair stands accused of sodomizing “without [her] consent.” That’s according to Sinclair’s official charge sheet, which Danger Room has acquired. Sinclair “attempt[ed] to willfully disobey the same by calling her cell phone” in March 2012. That attempted contact occurred after Sinclair allegedly sexually abused the captain.

It is unclear from the charge sheet if Huggins knew that Sinclair had forced himself on the captain, who apparently maintained a sexual relationship with Sinclair for years. Huggins recently completed a tour as the 82nd’s commanding officer and commander of U.S. forces in southern Afghanistan. He is slated for a promotion to lieutenant general.

On Tuesday, officials at Fort Bragg, North Carolina, announced that Sinclair will definitely face a court-martial on charges of forcible sodomy, sexual misconduct, conduct unbecoming an officer, and other charges. Sinclair’s arraignment at Fort Bragg is scheduled for Jan. 22.

According to the charge sheet, the married Sinclair displayed “pornographic and sexually explicit photographs and movies” while serving in both Iraq and Afghanistan; used his government charge card for personal uses; and carried “inappropriate relationship[s]” with at least two other female officers, one a major and the other a lieutenant. The charge sheet does not accuse Sinclair of abusing those officers.

Sinclair is also charged with covering up his abuse of the female captain. In March of 2012, while he was serving in Kandahar, the charge sheet alleges Sinclair “wrongfully endeavor[ed]] to impede an investigation in the case of himself, by deleting nude photographs” and the e-mail account that either sent or received them.

As has been previously reported, when criticized for using “derogatory and demeaning words to refer to female staff officers,” Sinclair allegedly responded, “I’m a general, I’ll say whatever the [redacted] I want,” according to the charge sheet, which calls that “conduct unbecoming an officer and gentleman.” The female captain allegedly abused by Sinclair testified at a pre-trial hearing at Fort Bragg in November.

Secrecy has surrounded the Sinclair case since it became public in September that Sinclair faced potential prosecution. It’s unusual for the sheet listing the charges facing an accused servicemember to be delayed for so long. Retired Air Force Col. Morris Davis, a former chief prosecutor at Guantanamo Bay, told Danger Room in November that it smelled of favoritism shown to a general officer that an enlisted soldier wouldn’t enjoy. The Army insists that’s flat wrong.

“We did not initially release the charge sheets because the Article 32 investigating officer needed to decide if the evidence presented was sufficient to bring forward to the General Court Martial Convening authority for his action,” says Col. Kevin Arata, the spokesman for the XVIII Airborne Corps at Fort Bragg. “Now that the GCMCA has made a decision on those charges, and the accused is being arraigned, we know explicitly what charges are being referred against the accused, thus the release of the redacted charge sheets at this time.”

Gary Solis, a military law scholar at Georgetown University, considers that a credible explanation. “There is much to criticize, when it comes to public access to disciplinary matters denied by the military, but this is not such a case,” Solis tells Danger Room. “To have publicly announced un-investigated charges in the case of a general officer, even this one, would have been a miscarriage of justice, had any of the charges been demonstrated at the 32 to be groundless.”

Davis, unconvinced, adds: “I can’t recall a case where there was public interest where the charges were withheld from public disclosure until after the Convening Authority decided to refer the case to trial.”

Sinclair is one of a number of prominent generals whose ethical lapses have prompted Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff, to launch an inquiry into whether the military needs to review its ethics training. (Dempsey’s initial findings, delivered last Friday, are that general and flag officers could benefit from ethics refreshers.)

But those other generals either misused small amounts of their official salaries for personal benefit, like Army Gen. William “Kip” Ward and Navy Adm. James Stavridis, or may have had “flirtatious” relationships over e-mail, like Marine Gen. John Allen. Sinclair stands accused of sexually assaulting, harassing and humiliating one of the officers under his command. It’s hard to imagine that a general officer needs a refresher course to understand how wrong that is.

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