NEW YORK, July 12 (Reuters Breakingviews) - The loud legal barking over the Libor deception portends a costly bite. It's unclear who got hurt in the rate-rigging mess, but the growing chatter about lawsuits means the banks behind it will shell out big bucks just fighting mounting lawsuits.

Investors and others claiming harm first sued over a year ago, shortly after U.S. regulators announced investigations. The lawsuits contend that more than a dozen banks started reporting artificially low rates in 2007 to understate their borrowing costs and look healthier in a shaky economy. The suits also claim the banks manipulated rates to goose profits from trades in Libor-pegged derivatives and swaps.

The evidence was largely circumstantial until last month, when Barclays and regulators on both sides of the Atlantic reached a $453 million settlement that included making public a slew of smoking-gun emails. New class actions and other lawsuits have been piling up since.

So far, they involve four types of alleged victims. One is firms that held Libor-linked bonds and other securities issued by banks involved in the rate-setting process. Another is public fund managers, like the city of Baltimore, that bought interest-rate swaps with returns based on Libor. A third is investment funds that traded financial instruments like Eurodollar futures tied to Libor. And finally there are investors who lost money on Barclays shares after the bank revealed its wrongdoing.

The lawsuits rely on essentially three legal theories:

ANTITRUST

The most popular seems to be that the banks colluded to manipulate Libor in violation of U.S. antitrust laws. But as the banks argued earlier this month, there seems to be no evidence they agreed to do so and, in any event, merely reporting a false interest rate doesn't hurt competition in any market for a product, an element necessary to prove a legal violation. So far, the antitrust argument seems a stretch.

But a lawsuit filed on July 6 takes a different tack. It claims seven banks that help set Euribor, the European interbank offered rate, did collude, and asserts there's proof. The Barclays settlement includes evidence that one of the bank's former traders spoke regularly with traders at other financial institutions about manipulating Euribor to benefit their respective derivatives positions. That could mean trouble, especially since damages are tripled in antitrust cases.

RACKETEERING

In the lawsuit it filed last year, Charles Schwab accused 16 banks of violating not only antitrust laws but also the U.S. Racketeer Influenced and Corrupt Organizations Act, or RICO. Designed to fight organized crime, the law requires a "pattern of racketeering" such as repeatedly committing certain federal crimes like wire fraud. The banks' behavior may qualify.

If they lied about Libor, they may have committed wire fraud by sending Schwab and other customers information about the phony rate or, as Barclays did, emailing internally about manipulating the benchmark figure. And if they even remotely coordinated their activities, they may have formed the "criminal enterprise" necessary for a RICO violation.

In addition to triple damages, RICO winners can get legal fees and the losers' property. A RICO action seems the most likely to succeed against the banks - and the most effective way to force a hefty settlement.

SECURITIES FRAUD

Barclays investors sued the bank on Tuesday for manipulating Libor to make itself look healthier than it was and for lying about being a "model corporate citizen." When the truth came out, it wiped some $6 billion off the value of Barclays' American Depository Receipts in two days. Shares of other Libor-setting banks also fell and could fall further if any are implicated in the scandal, offering other targets for lawsuits.

It's a typical stock-drop suit that faces the usual challenges, like proving the wrongdoing actually caused the investors' losses. It may also run into trouble under a recent Supreme Court decision that at least one federal court has ruled makes securities-fraud laws inapplicable to "predominantly a foreign transaction" like buying ADRs.

But the banks' legal troubles don't end there. On Wednesday, the attorneys general of Florida, Massachusetts and several other U.S states said they are determining whether they have jurisdiction over the banks and, if so, whether any residents or agencies of their states lost money because of Libor fudging. Federal criminal investigations are also in the works, with prosecutions of bank executives possible, especially with the public still lusting for rolling heads after the financial crisis.

How much all this may ultimately cost the banks is anyone's guess. Libor-linked securities and other holdings that investors could claim were affected run to at least $360 trillion. Analysts at Nomura, Morgan Stanley and elsewhere have come up with guesses that range into the billions of dollars for each bank. But proving that one, or even a handful, of false Libor submissions corrupted pricing based on amalgamating 16 different banks' quotes is no quick or easy task. Investors will have to decide whether they can stomach the legal limbo.

CONTEXT NEWS

- Attorneys general for Florida, Massachusetts and several other U.S. states announced on July 11 that they are considering filing claims on behalf of their states' residents against Barclays and other banks that may have illegally manipulated Libor, a benchmark interest rate for global lending. Dozens of municipalities, pension funds and other investors have already sued the banks, claiming losses on a variety of financial instruments linked to Libor.

- On June 27, Barclays announced that it had agreed to pay $453 million to settle criminal and civil charges that it helped rig Libor. Other banks involved in the process of determining Libor are also under investigation in the United States, the UK and other countries. 

(Reporting by Reynolds Holding, a Reuters Breakingviews columnist. The opinions expressed are his own.)

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