By manipulating the LIBOR rate, banks involved in the collusion have tried to understate their borrowing costs. This would make them look healthier in a shaky economy.

The manipulation of the rates also had the effect that clients were quoted the wrong rates, which affected the interest paid on transactions. There are four types of alleged victims;

1. Firms that held Libor-linked bonds and other securities issued by banks involved in the rate-setting process.
2. Public fund managers that bought interest-rate swaps with returns based on Libor.
3. Investment funds that traded financial instruments like Eurodollar futures tied to Libor.
4. Finally there are shareholders who lost money on Barclays shares after the bank revealed its wrongdoing.

In the US class actions are taken against the banks allegedly involved in colluding to manipulate the Libor rate. More lawsuits may follow if other banks are implicated. The lawsuits rely on essentially three legal theories: Antitrust, Racketeering and Securities Fraud.