San Mateo County, its joint powers financing authority and several other California public agencies are suing major banks they claim have manipulated a global benchmark interest rate.

The suit targets 20 current or former financial institutions that set LIBOR, or the London Interbank Offered Rate, which is the world’s benchmark interest rate used for setting short-term interest rates. LIBOR is set daily by the British Banker’s Association based on an average of the interest rates each member bank reports and Libor-based investments total in the trillions of dollars every year.

In March 2011, government regulators in four countries including the United States launched investigations of LIBOR rate manipulation to increase the banks’ own profits and to create the illusion of financial strength. In July 2012, Barclays admitted manipulating LIBOR with other members and in December 2012 UBS agreed to pay more than $1.5 million in penalties. A former UBS trader and two brokers were also arrested in London in connect with the investigation and criminal charges were filed in New York Federal Court against two former UBS traders.

As a result of the manipulation, many California public entities and investors may have received reduced interest payments on interest rate swaps, corporate bonds and other investments tied to the LIBOR rate, according to law firm Cotchett, Pitre & McCarthy, which represents each plaintiff.

"All the defendants saw when they made the decision to deceive the public and to take part in this rate manipulation conspiracy was their own bottom line with no regard for the victim,” the suit states.

The other parties include San Diego County, the cities of Richmond and Riverside, the Richmond Joint Powers Financing Authority, the East Bay Municipal Utility District and the Riverside Public Financing Authority.

The other defendants include Bank of America Corporation, Bank of Tokyo-Mitsubishi UFJ Ltd., Citigroup, Inc., Citibank, Rabobank, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings, HSBC Holdings, JSBC Bank, JPMorgan Chase & Co., JPMorgan Chase Bank, Lloyds Banking Group, HBOS, Royal Bank of Canada, The Norinchukin Bank, Societe Generale, The Royal Bank of Scotland Group, WestLB AG and Westdeutsche Immobilienbank AG.

The manipulation is "just another outrageous example of how self-regulated financial markets take advantage of average hard-working people and Main Street public entities,” said County Council John Beiers in a prepared statement.