The name London Interbank Offered Rate (Libor) is geographically misleading. It is simply the interest rate that banks around the world charge to lend to each other. It is computed in London but reflects the borrowing costs of 18 banks, including firms in Europe and Japan as well as three American institutions: Bank of America, Citigroup, and JPMorgan Chase. Used as a global benchmark for interest rates, it has by some estimates affected more than $360 trillion in financial products. The banks, not the market or the government, set the rate.

Among the big losers are investors, because some financial products are based on Libor. Several mutual-fund companies, including Vanguard Group Inc., are looking into whether their funds have been harmed by alleged interest-rate rigging by large banks. Money market funds and bond funds are two areas of focus. Hedge funds are also said to be looking at taking legal action.