10 Arrested in Theft of Personal Data

International authorities, with some help from Facebook, have arrested 10 people accused of operating a network of infected computers that stole personal information from millions of victims.

The Justice Department said Tuesday night that the F.B.I. and international agencies were helped in their investigations by Facebook, whose users were among those targeted by the malware, or malicious software, over the last several years.

The agencies arrested people from Bosnia and Herzegovina, Britain, Croatia, Macedonia, New Zealand, Peru and the United States, the F.B.I. said.

The suspects used a chain of infected computers to form what was known as the Butterfly botnet, which spread a piece of malicious software called Yahos, officials said. Versions of the software have long been trafficked among criminals who spread it over social networks and by other means, compromising the security of infected PCs and letting criminals steal personal data, including credit card numbers.

In a statement, the Justice Department said variants of this kind of software had infected about 11 million computers and caused more than $850 million in losses. A Justice Department official said those figures referred to the cumulative damage from the long-running problem, not a measure of the damage done by the people who were arrested.

Mark Hammell, Facebook’s Internet threat researcher, said the company had begun investigating suspicious behavior on its service two years ago. The malware had hijacked some users’ accounts and posted links on their friends’ Facebook pages. A person who clicked on those links could download the software and infect his computer.

Facebook’s researchers reverse-engineered the software to understand how it worked, and eventually traced some of its activities to computer servers controlled by the suspects. That helped Facebook determine the identities of some of the people involved in the crime ring, Mr. Hammell said.

“We realized we didn’t have the ability to stop it completely, and at that point, we decided the best response was to escalate this to law enforcement,” he said in an interview. Two of the people who were arrested were the original authors of the malware, he noted. Facebook said its users made up only a small percentage of those who were infected.

Security firms and social networks are generally on the lookout for this particular form of malware, and software to detect and eliminate it has been available for years. The Justice Department urged computer users to take common-sense measures, like antivirus scanning, to guard against the risk of infections, and said people who suspect they have been victimized should file a complaint with the F.B.I.’s Internet crime complaint center at ic3.gov.

Facebook said users who were concerned about being infected could check their computers at on.fb.me/infectedMSE. The malware does not infect Apple computers, Facebook said.

Manos Antonakakis, director of academic research at Damballa, a company that specializes in fighting botnets, said the size of the Butterfly botnet was significant. It was more than double the size of the last major botnet that authorities took down last November, one that used a piece of malware called DNSChanger that had infected an estimated four million computers.

“This is a major achievement for law enforcement,” he said, “and we look forward to many things like this, so we can effectively tackle emerging botnets out there.”

But Dr. Antonakakis said the estimate of 11 million infected machines was probably high, because a computer could be counted as a new device each time it connected to a different network, like the Wi-Fi at a Starbucks or a home router.

The $850 million figure may also be high given that credit card companies typically wipe out fraudulent charges.

Peter G. Neumann, principal scientist at SRI International, an engineering research laboratory, was less excited about the arrests. He said that defeating this particular botnet did not solve the fundamental problem of computer security being too weak. Anybody could easily take the same software and create the botnet again, he said.

“You’re solving a problem that wouldn’t exist if the systems were designed properly,” he said.

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10 Arrested in Theft of Personal Data

International authorities, with some help from Facebook, have arrested 10 people accused of operating a network of infected computers that stole personal information from millions of victims.

The Justice Department said Tuesday night that the F.B.I. and international agencies were helped in their investigations by Facebook, whose users were among those targeted by the malware, or malicious software, over the last several years.

The agencies arrested people from Bosnia and Herzegovina, Britain, Croatia, Macedonia, New Zealand, Peru and the United States, the F.B.I. said.

The suspects used a chain of infected computers to form what was known as the Butterfly botnet, which spread a piece of malicious software called Yahos, officials said. Versions of the software have long been trafficked among criminals who spread it over social networks and by other means, compromising the security of infected PCs and letting criminals steal personal data, including credit card numbers.

In a statement, the Justice Department said variants of this kind of software had infected about 11 million computers and caused more than $850 million in losses. A Justice Department official said those figures referred to the cumulative damage from the long-running problem, not a measure of the damage done by the people who were arrested.

Mark Hammell, Facebook’s Internet threat researcher, said the company had begun investigating suspicious behavior on its service two years ago. The malware had hijacked some users’ accounts and posted links on their friends’ Facebook pages. A person who clicked on those links could download the software and infect his computer.

Facebook’s researchers reverse-engineered the software to understand how it worked, and eventually traced some of its activities to computer servers controlled by the suspects. That helped Facebook determine the identities of some of the people involved in the crime ring, Mr. Hammell said.

“We realized we didn’t have the ability to stop it completely, and at that point, we decided the best response was to escalate this to law enforcement,” he said in an interview. Two of the people who were arrested were the original authors of the malware, he noted. Facebook said its users made up only a small percentage of those who were infected.

Security firms and social networks are generally on the lookout for this particular form of malware, and software to detect and eliminate it has been available for years. The Justice Department urged computer users to take common-sense measures, like antivirus scanning, to guard against the risk of infections, and said people who suspect they have been victimized should file a complaint with the F.B.I.’s Internet crime complaint center at ic3.gov.

Facebook said users who were concerned about being infected could check their computers at on.fb.me/infectedMSE. The malware does not infect Apple computers, Facebook said.

Manos Antonakakis, director of academic research at Damballa, a company that specializes in fighting botnets, said the size of the Butterfly botnet was significant. It was more than double the size of the last major botnet that authorities took down last November, one that used a piece of malware called DNSChanger that had infected an estimated four million computers.

“This is a major achievement for law enforcement,” he said, “and we look forward to many things like this, so we can effectively tackle emerging botnets out there.”

But Dr. Antonakakis said the estimate of 11 million infected machines was probably high, because a computer could be counted as a new device each time it connected to a different network, like the Wi-Fi at a Starbucks or a home router.

The $850 million figure may also be high given that credit card companies typically wipe out fraudulent charges.

Peter G. Neumann, principal scientist at SRI International, an engineering research laboratory, was less excited about the arrests. He said that defeating this particular botnet did not solve the fundamental problem of computer security being too weak. Anybody could easily take the same software and create the botnet again, he said.

“You’re solving a problem that wouldn’t exist if the systems were designed properly,” he said.

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Eli Lilly to Conduct Additional Study of Alzheimer’s Drug

The drug maker Eli Lilly & Company said on Wednesday that it planned an additional study of an experimental Alzheimer’s drug that failed to improve the condition of people with the disease, saying that it remained hopeful about the drug’s prospects.

The newest study is expected to get under way in the third quarter of 2013 and will focus on patients with mild Alzheimer’s disease. Lilly released results of two clinical trials in August that showed the drug, called solanezumab, did not significantly improve either the cognition or the daily functioning of people with mild and moderate forms of the disease. But despite that failure, the results also gave some reason for hope: when patients with mild Alzheimer’s were separated out, the drug was shown to significantly slow their decline in cognition.

In a statement on Wednesday, the company said it decided not to pursue approval of the drug based on existing study results after it met with officials from the Food and Drug Administration. A Lilly executive said, however, that the company was still optimistic.

“We remain encouraged and excited by the solanezumab data,” David Ricks, a senior vice president at Lilly and president of Lilly Bio-Medicines, said in the statement. “We are committed to working with the F.D.A. and other regulatory authorities to bring solanezumab to the millions of patients and caregivers suffering from this devastating disease who urgently need this potential treatment.”

The Lilly drug is the second Alzheimer’s treatment to fail in clinical trials this year. Pfizer and Johnson & Johnson stopped development of a similar treatment, bapineuzumab, after it, too, was not shown to work. Both drugs target beta amyloid, a protein in the brain that is found in people with Alzheimer’s disease.

Lilly shares closed at $49, down 3.2 percent.

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Eli Lilly to Conduct Additional Study of Alzheimer’s Drug

The drug maker Eli Lilly & Company said on Wednesday that it planned an additional study of an experimental Alzheimer’s drug that failed to improve the condition of people with the disease, saying that it remained hopeful about the drug’s prospects.

The newest study is expected to get under way in the third quarter of 2013 and will focus on patients with mild Alzheimer’s disease. Lilly released results of two clinical trials in August that showed the drug, called solanezumab, did not significantly improve either the cognition or the daily functioning of people with mild and moderate forms of the disease. But despite that failure, the results also gave some reason for hope: when patients with mild Alzheimer’s were separated out, the drug was shown to significantly slow their decline in cognition.

In a statement on Wednesday, the company said it decided not to pursue approval of the drug based on existing study results after it met with officials from the Food and Drug Administration. A Lilly executive said, however, that the company was still optimistic.

“We remain encouraged and excited by the solanezumab data,” David Ricks, a senior vice president at Lilly and president of Lilly Bio-Medicines, said in the statement. “We are committed to working with the F.D.A. and other regulatory authorities to bring solanezumab to the millions of patients and caregivers suffering from this devastating disease who urgently need this potential treatment.”

The Lilly drug is the second Alzheimer’s treatment to fail in clinical trials this year. Pfizer and Johnson & Johnson stopped development of a similar treatment, bapineuzumab, after it, too, was not shown to work. Both drugs target beta amyloid, a protein in the brain that is found in people with Alzheimer’s disease.

Lilly shares closed at $49, down 3.2 percent.

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Study Shows a Pattern of Risky Loans by F.H.A.

A new and extensive analysis of 2.4 million loans insured by the Federal Housing Administration in recent years shows a pattern of risky lending that could generate $20 billion in losses and harm thousands of the nation’s most vulnerable borrowers. By ignoring risks in loans it insured in 2009 and 2010, the study concludes, the F.H.A. is imperiling both borrowers and taxpayers who stand behind the agency.

The analysis emerged less than a month after the F.H.A.’s auditor submitted a troubling report on the financial soundness of its insurance fund. In mid-November, the auditor estimated that the fund, which backs $1.1 trillion in mortgages, has a value of negative $13.5 billion. In other words, if it were to stop insuring loans today, the F.H.A. fund could not cover the losses anticipated on loans it has already insured.

The new study of the potential risks in recent F.H.A.-insured loans is illuminating because it provides a level of detail, including where government-backed loans are, that is usually missing from agency analyses. In addition, the report’s loss estimates are somewhat surprising given that the loans it examined were made after the mortgage crisis became evident.

The loan analysis was conducted by Edward Pinto, a resident fellow at the American Enterprise Institute, a conservative organization. But its findings were based entirely on foreclosure estimates made by the F.H.A.’s auditor as well as detailed individual loan data like ZIP codes and borrower credit scores.

Officials at the Department of Housing and Urban Development, which oversees the F.H.A., were briefed on the study’s findings earlier this week.

George Gonzalez, a spokesman for F.H.A., disputed the findings of the analysis. “The assertion that F.H.A. is setting up potential homeowners for failure by insuring 30-year, fixed-rate, fully documented loans for underserved borrowers is not supported by the information presented,” he said. “Selective use of F.H.A. data ignores that F.H.A. has successfully provided access to mortgage financing for millions of creditworthy borrowers for almost 80 years.”

The mission of the F.H.A., created in 1934, is to provide “homeownership opportunities for first-time homebuyers and other borrowers who would not otherwise qualify for conventional mortgages on affordable terms, as well as for those who live in underserved areas where mortgages may be harder to get.” It was founded to save homeowners from default during the Great Depression.

In recent years, the F.H.A. has been increasing its participation in the market. After the mortgage crisis, traditional lenders withdrew from the business and borrowing to buy a home became much more difficult. The F.H.A., as well as Fannie Mae and Freddie Mac, have stepped in to fill that void. While Fannie and Freddie have tightened their loan standards, the F.H.A.’s underwriting requirements have remained liberal.

To receive F.H.A. backing on their loans, borrowers must have a credit score of at least 580 out of a possible 850, and they are required to put down at least 3.5 percent. F.H.A. allows the borrowers whose loans it insures to have a monthly housing debt payment of around 30 percent of their incomes.

Still, 40 percent of the 2010 loans in the F.H.A.’s insurance portfolio were made to borrowers whose total monthly debt payments were greater than 50 percent of their monthly incomes, the study found, a dangerous level.

F.H.A. does not adequately monitor the risks in the loans it backs, the study said. Moreover, it does not charge guarantee fees appropriately adjusted to reflect these risks. For example, the study notes that F.H.A. levies the same insurance premium for a borrower with a 3.5 percent down payment, a 580 credit score and a 50 percent total debt-to-income level as one who puts 20 percent down, has a 720 credit score and 25 percent debt-to-income.

The concentration of loans backed by the F.H.A. in areas of subpar family incomes is another warning flag, according to the study. Of the 2.4 million loans studied, some 44 percent were made to borrowers in ZIP codes where the median family income was below that of the corresponding metropolitan area. These loans will most likely generate foreclosure rates averaging 15 percent, the study concluded, well above the overall 9.6 percent average the F.H.A.’s auditor has projected for those years.

That so many F.H.A.-insured loans are going to at-risk families concerns Mr. Pinto. “The F.H.A.’s underwriting policies encourage low- and moderate-income families with low credit scores to make a risky financing decision,” he said, “one combining a low score with a 30-year loan term and a low down payment. This sets up for failure the very families and communities it is the F.H.A.’s mission to help.”

Because of the potential for borrower harm that Mr. Pinto sees in F.H.A.’s practices, he said the agency should reduce mortgage terms to 20 years, so that homeowners can build up equity more easily. Or the agency should insure loans only for borrowers who carry lower overall debt loads.

“The F.H.A. should set loan terms that help homeowners establish meaningful equity in their homes with the goal of ending their dependence on F.H.A. lending,” he said.

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North Korea Launches Rocket, Defying Likely Sanctions

SEOUL, South Korea — North Korea defied the likelihood of more sanctions by the United Nations Security Council to launch a rocket on Wednesday, demonstrating that the government of its new leader, Kim Jong-un, was pressing ahead to master the technology needed to deliver a nuclear warhead on intercontinental ballistic missiles.

The Unha-3, or Galaxy-3, rocket blasted off from the Sohae Satellite Launching Station in Tongchang-ri on North Korea’s western coast near China on Wednesday morning, a spokesman for South Korea’s Defense Ministry said.

“That’s all we can confirm right now,” the spokesman said, speaking on condition of anonymity until his government made an official announcement.

It was not immediately known whether the rocket has succeeded in fulfilling North Korea’s stated goal of putting a satellite into orbit.

North Korea has said its three-stage rocket would carry an earth-observation satellite named Kwangmyongsong-3, or Shining Star-3, and that it was exercising its right to peaceful activity in space.

But Washington and its allies have said they think that North Korea’s rocket program has less to do with putting a satellite into orbit than with developing a delivery vehicle for a nuclear warhead and trying to turn the country into a more urgent threat that Washington must deal with by offering diplomatic and economic concessions.

While North Korea may still have other technological thresholds to cross, like the miniaturizing of its nuclear weapons, a successful launching of a satellite into orbit would suggest that the country had overcome a major hurdle in its efforts to demonstrate its potential of mating its growing nuclear weapons program with intercontinental ballistic missile capability.

A failure would be an embarrassment for the young Mr. Kim, who has been struggling to establish himself a new North Korean leader hailed at home and feared abroad. Whether the launching was successful or not, Mr. Kim, by attempting a second rocket launching in the first year of his rule despite international condemnations, was dashing hopes among some analysts that he might soften North Korea’s confrontational stance. Instead, he was seen as intent on bolstering his father’s main legacy of nuclear weapons and long-range missile programs to justify his own hereditary rule.

Only Monday, it told the rest of the world that it had found a technical glitch with its rocket and needed until Dec. 29 to fix the problem and carry out the launch. . Outside analysts have been speculating what might be going on behind the dark cover North Korean engineers had put up around the launching pad to prevent United States spy satellites from watching.

“A successful test would raise as a top-line national security issue for the Obama administration the specter of a direct North Korean threat to the U.S. homeland,” Victor D. Cha and Ellen Kim wrote in a recent analysis posted on the Web site of the Center For Strategic and International Studies.

Mr. Kim hardly needed another failure. The North’s first rocket launched since he took over following the death of his father a year ago broke apart shortly after blast-off in April, forcing his regime to admit to the failure in front of the foreign journalists it had invited to watch the test. This time, North Korea did not invite foreign journalists. Nor did the government announce the launching plan to its domestic audience. South Korean officials said this suggested that the regime intended to cover it up if the satellite launching failed or declare the launching a success regardless of the outcome, as it had before.

The missile capabilities of a country as opaque as North Korea are notoriously hard to assess. United States and South Korean officials have said that all of the North’s four multiple-stage rockets previously launched have exploded in mid-air or failed in their stated goal of thrusting a satellite into orbit. Still, then-Defense Secretary Robert M. Gates said in early 2011 that North Korea was within five years of being able to strike the continental United States with an intercontinental ballistic missile.

Wednesday’s unusual winter-time rocket launching came five days before the one-year anniversary of the death of the Mr. Kim’s father, Kim, Jong-il, on Dec. 17, which his son tried to mark with a fanfare aimed at showcasing his dynasty’s achievement in empowering the small and impoverished nation.

It also came a week before its rival, South Korea, was scheduled to elect its new president on Dec. 19.

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Deal Professor: In Netflix Case, a Chance to Re-examine Old Rules

Netflix is in the Securities and Exchange Commission’s sights over a post on Facebook by Reed Hastings, its chief executive, saying that the video streaming company’s monthly viewing had reached a billion hours. Yet, the case is more convincing as an illustration of how the regulator clings to outdated notions of how markets work.

In July, Mr. Hastings posted three lines stating that “Netflix monthly viewing exceeded 1 billion hours for the first time ever in June.”

While his comments may have seemed as innocuous as yet another Facebook post about cats, for the S.E.C., it was something more sinister, a violation of Regulation FD.

Regulation FD was the brainchild of Arthur Levitt, a former chairman of the commission. During Mr. Levitt’s time, companies would often disclose earnings estimates and other important information not to the markets but to select analysts. Companies did so to preserve confidentiality and drip out earnings information gently to the markets, and in that way avoid the volatility associated with a single announcement.

For Mr. Levitt, this was heresy. He believed not only in disclosure, but in the principle that all investors should have equal access to company information. Regulation FD was the answer.

In general, Regulation FD says that when a public company gives material nonpublic information to anyone, the company must also publicly disclose that information to all investors. Regulation FD in that way prevents selective leaks and, according to the S.E.C., promotes “full and fair disclosure.”

It seems so simple. How can more disclosure be bad? But both public companies and investment banks argued that the rule would actually reduce the flow information, as companies, now forbidden from disclosing only to analysts, would simply choose not to release the information. And because analysts would no longer have that advantage in knowledge, their value would be harder to justify, resulting in fewer analysts. Stockholders would be worse off as less information was in the market.

The S.E.C. disputed these arguments, and Regulation FD went into effect over a decade ago.

Subsequent studies of Regulation FD’s effects have shown that the critics may have been right. One of the most-cited studies found that analyst coverage of smaller companies dropped. And since there was now less information in the market about these smaller companies, investors subsequently demanded a bigger premium to invest, increasing financing costs. Another study found that the introduction of Regulation FD increased market volatility because information was no longer informally spread. In fairness, some studies found different results, but the bulk of findings are that Regulation FD is at best unhelpful.

Despite these studies and companies’ complaints about the costs of compliance, the S.E.C. has stuck to the rule. Until the Netflix case, however, the agency appeared to try to keep the peace by seeking redress in only the most egregious cases.

In all, there have been only about a dozen Regulation FD cases since its adoption, including one against Office Depot in 2010, for which it was fined $1 million for hinting its earnings estimates to analysts. But while enforcement actions have been rare, it has required that companies fundamentally change the way they disclose information.

Then Netflix came along.

The S.E.C.’s case appears to be rest on much weaker grounds than previous ones involving Regulation FD. To make a Regulation FD claim, the agency must show the information was released privately and that it was material. But neither element seems certain here.

Mr. Hastings’s announcement that the milestone of one billion hours was achieved seems more like a public relations stunt than a disclosure of material information. And Netflix had previously said that it was close to this milestone, so followers knew it was coming.

But while it seems like this information was a nonevent, this post occurred as Netflix’s stock was beginning to rise, and by two trading days later, it had jumped almost 20 percent. While some may view this as proof of the post’s materiality, it is hard to read too much; Netflix shares can be volatile, and a Citigroup analysts’ report released during that time could have also moved the stock.

Then there is the issue of whether this was privately disclosed information.

Some have seized on this requirement to claim that the S.E.C. is in essence saying that Facebook is not a “public” Web site. This is laughable; after all, Mr. Hastings is popular — he has more than 200,000 subscribers to his Facebook account. It is certain that more people read this comment on Facebook than if it had been in an S.E.C. filing.

But the S.E.C.’s argument is likely to be more technical than saying Facebook is private. In a 2008 release on Web site disclosure, the S.E.C. asserted that a Web site or a blog could be public for Regulation FD purposes but only if it was a “recognized channel of distribution of information. ”

In other words, a public disclosure is not about being public but about being made where investors knew the company regularly released investor information.

So the S.E.C. is likely to sidestep the issue of Facebook’s “public” nature and simply argue that Netflix never alerted investors that Facebook was the place to find Netflix’s investor information. Mr. Hastings appeared to concede this, and in a Facebook post last week, he argued that while Facebook was “very public,” it was not where the company regularly released information. If this dispute goes forward, expect the parties to spend thousands of hours arguing about whether the post contained material information rather than whether Facebook is public.

But it all seems so silly and technical and shows the S.E.C.’s fetish of trying to control company disclosure to the nth degree. It’s easy to criticize the agency for not understanding social media, but I would argue that in trying to bring a rare Regulation FD enforcement action, it truly missed an opportunity. Rather than focus on technicalities that few people understand, it could have used this case to examine what it means to be public and how social media results in more, not less, disclosure.

If the idea behind Regulation FD is to encourage disclosure, then allowing executives to comment freely on Facebook and Twitter, recognizing them as a public space akin to a news release, is almost certain to result in more disclosure, not less, and reach many more people than an S.E.C. filing would. The agency’s position will only force executives to check with lawyers and avoid social media, chilling disclosure.

And this leads to the bigger issue. Regulation FD was always about principles of fairness that belied the economics of the rule. If the S.E.C. really wanted to encourage disclosure, then it might want to take a step back and consider whether after a decade, Regulation FD is worth all the costs. Perhaps shareholders would even prefer more disclosure on Facebook and fewer regulatory filings. I suspect they might, if it meant more information and generally higher share prices.

In any event, this case still has a way to go. Netflix disclosed only the receipt of a Wells notice, which meant the S.E.C. staff was recommending to the commissioners that an enforcement action be brought. It is now up to the commissioners to decide. Given the issues with this case, they may decide it isn’t worth it. It would still leave Netflix with substantial legal fees, but perhaps save the agency from another embarrassing defeat.

But while that may end the matter, it shouldn’t. The regulator could use the Netflix case to rethink its disclosure policies in light of not only the rise of social media but how the market actually works. After all, even the S.E.C. has a Twitter account these days.

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Rate of Childhood Obesity Falls in Several Cities

Jessica Kourkounis for The New York Times

At William H. Ziegler Elementary in Northeast Philadelphia, students are getting acquainted with vegetables and healthy snacks.

PHILADELPHIA — After decades of rising childhood obesity rates, several American cities are reporting their first declines.

The trend has emerged in big cities like New York and Los Angeles, as well as smaller places like Anchorage, Alaska, and Kearney, Neb. The state of Mississippi has also registered a drop, but only among white students.

“It’s been nothing but bad news for 30 years, so the fact that we have any good news is a big story,” said Dr. Thomas Farley, the health commissioner in New York City, which reported a 5.5 percent decline in the number of obese schoolchildren from 2007 to 2011.

The drops are small, just 5 percent here in Philadelphia and 3 percent in Los Angeles. But experts say they are significant because they offer the first indication that the obesity epidemic, one of the nation’s most intractable health problems, may actually be reversing course.

The first dips — noted in a September report by the Robert Wood Johnson Foundation — were so surprising that some researchers did not believe them.

Deanna M. Hoelscher, a researcher at the University of Texas, who in 2010 recorded one of the earliest declines — among mostly poor Hispanic fourth graders in the El Paso area — did a double-take. “We reran the numbers a couple of times,” she said. “I kept saying, ‘Will you please check that again for me?’ ”

Researchers say they are not sure what is behind the declines. They may be an early sign of a national shift that is visible only in cities that routinely measure the height and weight of schoolchildren. The decline in Los Angeles, for instance, was for fifth, seventh and ninth graders — the grades that are measured each year — between 2005 and 2010. Nor is it clear whether the drops have more to do with fewer obese children entering school or currently enrolled children losing weight. But researchers note that declines occurred in cities that have had obesity reduction policies in place for a number of years.

Though obesity is now part of the national conversation, with aggressive advertising campaigns in major cities and a push by Michelle Obama, many scientists doubt that anti-obesity programs actually work. Individual efforts like one-time exercise programs have rarely produced results. Researchers say that it will take a broad set of policies applied systematically to effectively reverse the trend, a conclusion underscored by an Institute of Medicine report released in May.

Philadelphia has undertaken a broad assault on childhood obesity for years. Sugary drinks like sweetened iced tea, fruit punch and sports drinks started to disappear from school vending machines in 2004. A year later, new snack guidelines set calorie and fat limits, which reduced the size of snack foods like potato chips to single servings. By 2009, deep fryers were gone from cafeterias and whole milk had been replaced by one percent and skim.

Change has been slow. Schools made money on sugary drinks, and some set up rogue drink machines that had to be hunted down. Deep fat fryers, favored by school administrators who did not want to lose popular items like French fries, were unplugged only after Wayne T. Grasela, the head of food services for the school district, stopped buying oil to fill them.

But the message seems to be getting through, even if acting on it is daunting. Josh Monserrat, an eighth grader at John Welsh Elementary, uses words like “carbs,” and “portion size.” He is part of a student group that promotes healthy eating. He has even dressed as an orange to try to get other children to eat better. Still, he struggles with his own weight. He is 5-foot-3 but weighed nearly 200 pounds at his last doctor’s visit.

“I was thinking, ‘Wow, I’m obese for my age,’ ” said Josh, who is 13. “I set a goal for myself to lose 50 pounds.”

Nationally, about 17 percent of children under 20 are obese, or about 12.5 million people, according to the Centers for Disease Control and Prevention, which defines childhood obesity as a body mass index at or above the 95th percentile for children of the same age and sex. That rate, which has tripled since 1980, has leveled off in recent years but has remained at historical highs, and public health experts warn that it could bring long-term health risks.

Obese children are more likely to be obese as adults, creating a higher risk of heart disease and stroke. The American Cancer Society says that being overweight or obese is the culprit in one of seven cancer deaths. Diabetes in children is up by a fifth since 2000, according to federal data.

“I’m deeply worried about it,” said Francis S. Collins, the director of the National Institutes of Health, who added that obesity is “almost certain to result in a serious downturn in longevity based on the risks people are taking on.”

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Rate of Childhood Obesity Falls in Several Cities

Jessica Kourkounis for The New York Times

At William H. Ziegler Elementary in Northeast Philadelphia, students are getting acquainted with vegetables and healthy snacks.

PHILADELPHIA — After decades of rising childhood obesity rates, several American cities are reporting their first declines.

The trend has emerged in big cities like New York and Los Angeles, as well as smaller places like Anchorage, Alaska, and Kearney, Neb. The state of Mississippi has also registered a drop, but only among white students.

“It’s been nothing but bad news for 30 years, so the fact that we have any good news is a big story,” said Dr. Thomas Farley, the health commissioner in New York City, which reported a 5.5 percent decline in the number of obese schoolchildren from 2007 to 2011.

The drops are small, just 5 percent here in Philadelphia and 3 percent in Los Angeles. But experts say they are significant because they offer the first indication that the obesity epidemic, one of the nation’s most intractable health problems, may actually be reversing course.

The first dips — noted in a September report by the Robert Wood Johnson Foundation — were so surprising that some researchers did not believe them.

Deanna M. Hoelscher, a researcher at the University of Texas, who in 2010 recorded one of the earliest declines — among mostly poor Hispanic fourth graders in the El Paso area — did a double-take. “We reran the numbers a couple of times,” she said. “I kept saying, ‘Will you please check that again for me?’ ”

Researchers say they are not sure what is behind the declines. They may be an early sign of a national shift that is visible only in cities that routinely measure the height and weight of schoolchildren. The decline in Los Angeles, for instance, was for fifth, seventh and ninth graders — the grades that are measured each year — between 2005 and 2010. Nor is it clear whether the drops have more to do with fewer obese children entering school or currently enrolled children losing weight. But researchers note that declines occurred in cities that have had obesity reduction policies in place for a number of years.

Though obesity is now part of the national conversation, with aggressive advertising campaigns in major cities and a push by Michelle Obama, many scientists doubt that anti-obesity programs actually work. Individual efforts like one-time exercise programs have rarely produced results. Researchers say that it will take a broad set of policies applied systematically to effectively reverse the trend, a conclusion underscored by an Institute of Medicine report released in May.

Philadelphia has undertaken a broad assault on childhood obesity for years. Sugary drinks like sweetened iced tea, fruit punch and sports drinks started to disappear from school vending machines in 2004. A year later, new snack guidelines set calorie and fat limits, which reduced the size of snack foods like potato chips to single servings. By 2009, deep fryers were gone from cafeterias and whole milk had been replaced by one percent and skim.

Change has been slow. Schools made money on sugary drinks, and some set up rogue drink machines that had to be hunted down. Deep fat fryers, favored by school administrators who did not want to lose popular items like French fries, were unplugged only after Wayne T. Grasela, the head of food services for the school district, stopped buying oil to fill them.

But the message seems to be getting through, even if acting on it is daunting. Josh Monserrat, an eighth grader at John Welsh Elementary, uses words like “carbs,” and “portion size.” He is part of a student group that promotes healthy eating. He has even dressed as an orange to try to get other children to eat better. Still, he struggles with his own weight. He is 5-foot-3 but weighed nearly 200 pounds at his last doctor’s visit.

“I was thinking, ‘Wow, I’m obese for my age,’ ” said Josh, who is 13. “I set a goal for myself to lose 50 pounds.”

Nationally, about 17 percent of children under 20 are obese, or about 12.5 million people, according to the Centers for Disease Control and Prevention, which defines childhood obesity as a body mass index at or above the 95th percentile for children of the same age and sex. That rate, which has tripled since 1980, has leveled off in recent years but has remained at historical highs, and public health experts warn that it could bring long-term health risks.

Obese children are more likely to be obese as adults, creating a higher risk of heart disease and stroke. The American Cancer Society says that being overweight or obese is the culprit in one of seven cancer deaths. Diabetes in children is up by a fifth since 2000, according to federal data.

“I’m deeply worried about it,” said Francis S. Collins, the director of the National Institutes of Health, who added that obesity is “almost certain to result in a serious downturn in longevity based on the risks people are taking on.”

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DealBook: HSBC to Pay $1.92 Billion to Settle Money Laundering Charges

Federal and state authorities announced on Tuesday that they had secured a record $1.92 billion payment from HSBC to settle charges that the British banking giant transferred billions of dollars for sanctioned nations, facilitated Mexican drug cartels to launder tainted money and worked with Saudi Arabian banks with ties to terrorist organizations.

The case, a major victory for the government, represents the conclusion of a multi-agency investigation. It convened the Justice Department, the Manhattan district attorney’s office, bank regulators and the Treasury Department.

In a filing in Federal District Court in Brooklyn, federal prosecutors said the bank had agreed to enter into a deferred prosecution agreement and to forfeit $1.26 billion. The four-count criminal information filed in the court charged HSBC with failure to maintain an effective anti-money laundering program, failure to conduct due diligence on its foreign correspondent affiliates and violating sanctions and the Trading With the Enemy Act.

“HSBC is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries, ” Lanny A. Breuer, the head of the Justice Department’s criminal division, said in a statement.

At a news conference in Brooklyn, Mr. Breuer defended the decision to not indict the bank, calling the action “a very just, very real and very powerful result.”

The deal, which required the bank to admit to the accusations, lasts for five years. If the bank violates the terms of the agreement, prosecutors can move to indict the bank.

In addition to forfeiting the $1.26 billion, HSBC agreed to pay the Office of the Comptroller of the Currency announced $500 million as part of a civil penalty against the bank, while the Federal Reserve assessed a $165 million civil penalty.

HSBC also entered in a deferred prosecution agreement with the Manhattan district attorney’s office, admitting that it violated New York State law by falsifying the records of New York financial institutions.

The Manhattan district attorney, Cyrus R. Vance Jr., said in a statement: “New York is a center of international finance, and those who use our banks as a vehicle for international crime will not be tolerated.”

In a statement, Stuart Gulliver, the chief executive of HSBC, said: “We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organization from the one that made those mistakes.”

The turmoil at HSBC is playing out amid a broad crackdown on foreign by federal and state authorities to stanch the flow of illegal money across the world. The officials have been working to clamp down the financing pipeline to cartels and terrorist organizations.

For the most part, though, the investigations have centered on so-called sanctions violations. In June, the ING Group reached a $619 million settlement with government authorities to resolve accusations that it had moved billions of dollars through its United States subsidiaries for rogue nations like Iran.

In the latest action, federal and state authorities reached a $327 million agreement with another British bank, Standard Chartered, on Monday. The bank admitted to processing thousands of transactions worth hundreds of millions of dollars for Iranian and Sudanese clients.

Beyond the sanctions violations at HSBC, prosecutors unearthed evidence that the bank enabled Mexican drug cartels to launder money into the American financial system.

Problems for HSBC mounted in July when the Senate Permanent Subcommittee on Investigations accused the bank of exposing the United States “financial system to money laundering and terrorist financing risks.”

At the upper echelons of the organization, the Senate report found, some bank executives had ignored warning signs and permitted the illegal behavior to continue unabated from 2001 to 2010.

The original problems began when agents with Immigration and Customs Enforcement spotted questionable trails of money between HSBC’s Mexican and United States operations.

Despite a chorus of warnings from federal banking regulators about the vulnerability of HSBC’s operations throughout the world, the bank didn’t fortify its controls, the Senate report found.

One of HSBC’s branches in the Cayman Islands, the Senate report said, had virtually no oversight despite holding roughly 50,000 client accounts.

Alarmed, a compliance officer complained, Senate investigators found, and asked whether practices at the bank were part of “the School of Low Expectations Banking.”

Particularly concerning to prosecutors was the seeming complicity of senior bank executives, according to law enforcement officials briefed on the matter.

For example, an HSBC executive rallied for the firm to continue dealings with Al Rajhi Bank of Saudi Arabia, even though some of the owners of the firm had substantive links to the financing of terrorism, according to the report.

HSBC’s Mexican operations moved at least $7 billion from 2007 to 2009 into the United States. Such a large volume of money, law enforcement authorities warned, had to include “drug proceeds.”

In July at the Congressional hearings, HSBC executives vowed to reform. As part of that, David Bagley, who served as head of compliance at the British bank since 2002, announced his resignation during the hearings.

HSBC has since on a hiring spree, fortifying its ranks with seasoned executives. On Tuesday, prosecutors praised those efforts, noting that the bank cooperated with the investigation

HSBC brought in Stuart A. Levey as chief legal officer in January. Mr. Levey, a former under secretary at the Treasury Department who focused on terrorism and financial intelligence, has been working out new internal standards that span the company for monitoring and policing the movement of money. In August, the bank hired Robert Werner, who formerly oversaw the group at the Treasury Department that enforces sanctions. In its latest move to improve controls, HSBC promoted Mr. Warner on Tuesday to oversee a special unit dedicated to anti-money laundering.

William Alden and Ben Protess contributed reporting.

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