The European Union has reached a settlement with bankers on what may be the most far-reaching fraud case yet. The manipulation of the London Interbank Offered Rate (LIBOR) shocked the financial world as the LIBOR rate is used for financial products all over the globe and in many different markets from car and home loans to complex derivatives. Rigging this key rate for profit meant numerous people and institutions received altered rates on their loans.

The widely anticipated settlement, worth about $2.3 billion and announced by European Union antitrust officials on Wednesday, is the largest combined penalty ever levied by European competition authorities and marks the culmination of an investigation that dates back more than two years.

European officials said they uncovered a collusive scheme by traders at some of the world’s largest banks, including Citigroup, the Royal Bank of Scotland and Deutsche Bank, to improperly influence the London interbank offered rate, or Libor, as it relates to the Japanese yen and the euro interbank offered rate, or Euribor.

Traders would manipulate the LIBOR rate by submitting false reports working in conjunction with other traders to drive the rate up or down based on their particular bets – the ultimate free lunch.

One difficulty in making LIBOR cases previously was the complicity of certain government officials – such as fmr. Treasury Secretary Tim Geithner – in the fraud. Geithner and other regulators ignored infractions on the grounds that revelations of additional scandals in the financial service industry, particularly manipulation of LIBOR, could undermine faith in the financial system. Basically an excuse that can be and has been used to justify banksters being above the law or Too Big To Jail.

Though $2.3 billion is pretty weak and certainly won’t deter anyone, it seems more fines may be forthcoming.

The Libor problems aren’t over yet for many banks. JPM noted in its statement that the Commission continues to investigate it in connection with Euro-interest-rate derivatives referenced to the EURIBOR benchmark rate.

“JPMorgan Chase has cooperated fully with the European Commission throughout its investigation and does not believe that the firm engaged in wrongdoing with respect to the EURIBOR benchmark. The company intends to defend itself fully,” the bank said.

Jamie Dimon back in the news.

Worth noting is that the EU’s cases focus on antitrust violations not fraud – that the banks colluded with each other to prevent competition. The US has focused more on the fraud if for no other reason than the government has colluded with Wall Street too much to accuse them of conspiracy without implicating themselves.