The US Federal Deposit Insurance Corporation sued HSBC, Citigroup, Deutsche Bank and 12 other global banking heavyweights on Friday for manipulating the Libor benchmark interest rate.
Two men use ATM machines at an HSBC branch in Hong Kong on March 4, 2013
The manipulation caused "substantial losses" to 38 US banks that were shut down due to insolvency during and after the 2008 financial crisis, according to the FDIC.
The regulator said the accused institutions cheated the closed banks in US dollar-based Libor swaps and other agreements through the manipulation of the rate between 2007 and 2011.
Libor, or the London Interbank Offered Rate, is used as a reference for some $350 trillion worth of financial contracts worldwide, from corporate loans to financial swap contracts.
"The panel bank defendants fraudulently and collusively suppressed USD Libor, and they did so to their advantage," the FDIC's filing said.
The banks named are, or were, participants in setting the daily Libor rate.
They include Bank of America, Citigroup and JPMorgan Chase of the United States, Germany's Deutsche Bank and WestLB, Britain's HSBC, Barclays and Lloyds banks, Japan's Norinchukin Bank and Bank of Tokyo-Mitsubishi, Credit Suisse and UBS of Switzerland, Royal Bank of Scotland, Royal Bank of Canada and Rabobank of the Netherlands.
Several of the banks have already paid substantial fines to regulators and judicial authorities in the United States and Europe for participating in rate-fixing.
Also sued was the British Bankers' Association, which at the time oversaw the banks' daily fixing of Libor.
"BBA participated in the alleged scheme to protect the revenue stream it generated from selling Libor licenses and to appease the Panel Bank Defendants that were members of the BBA," the filing said.
The FDIC said it was seeking full damages for losses incurred by the closed banks, punitive damages and damages for violating US antitrust statutes.
The US and British central banks began investigating rigging of the Libor rate in the middle of the financial crisis in 2008.
But those probes only bore concrete fruit in 2012, when Barclays bank was the first to settle allegation and was force to pay fines of $450 million.
Since then, numerous banks have been fined from New York to Tokyo. UBS was fined $1.5 billion by US, British and Swiss regulators, and RBS paid out more than $600 million.
The scandal has also spread to other areas of London-focused trading, with regulators and justice officials around the world now focusing on foreign exchange rate manipulation.
The Hong Kong Monetary Authority separately concluded that UBS had attempted to rig the local benchmark rate Hibor.
The HKMA said it found about 100 internal chat messages sent during 2006 to 2009 that "contained change requests by several UBS traders to the UBS Hibor submitter with a view to rigging the Hibor."