Any attempts by bankers or financiers (among other major players in the market) to manipulate the benchmark rate of interest to their own advantage, in a direct or indirect way. For example, a bank may do that in an attempt to improve its cost of borrowing funds from the market. This may also happen when a trader or a marker player forges an information-sharing relationship with one or more of the rate setters that influences their rate submission as part of the panelist group. In exchange for manipulating the published benchmark rate, and benefiting trading positions, a market player may offer in-kind services such as re-directing business (potential transactions) to a certain bank or free meals, tickets, etc.

A prime example of such rate rigging schemes is the LIBOR scandal (LIBOR rigging): a large scale and wide-scope scheme (emerged in the aftermath of the financial crisis 2008) where bankers at a number of major financial institutions colluded with each other to manipulate the rate (LIBOR)- the main reference point for calculating global short-term interest rates. The panelist banks (participating banks) filed flawed interest rate data in order to reduce the benchmark rate and their own borrowing cost (a practice known as low balling). Particularly at the time of a crisis or market pressure, diversion between normal rates and reported (flawed) rates is found to have exacerbated bank failures, as reported LIBOR failing to reflect rising default- insurance costs, among other issues.

The scandal cast doubt on the financial industry and instigated a wave of lawsuits, regulatory actions, and penalties on involved parties.