Jerome Kerviel in Custody

While the negative $7 billion man, junior trader Jerome Kerviel, remains in the custody of Paris authorities, shareholders of his former employer, French bank Societe Generale [euronext: GLE] , are calling for a deeper investigation into his $7 billion in unauthorized trade losses which became public last week. According to French newspaper Le Monde, approximately 100 SocGen shareholders filed charges of insider trading after discovering that American billionaire banker Robert A. Day dumped $60 million worth of bank stock on January 18, days before Kerviel’s trades became public.

Meanwhile, prosecutor Jean-Claude Marin told the press that executives at Eurex, a European derivatives exchange, as well as some compliance officers at SocGen had red flagged some of Kerviel’s trades late last year, but that the 31 year-old banker said he was able to escape detection by hacking the bank’s computer system, falsifying documents and by not leaving his trading post to take a vacation. The motive behind this multi-billion dollar French fraud? Marin says that Kerviel confessed he wanted to be known as “an exceptional trader” and to make a 2007 bonus of $450,000, in addition to his $147,000 salary.

If a bank that dates back to Napoleon III can be brought to its knees in mere days by a single fraudster, what’s a small business owner to do to make sure their employees are on the level? “You have to hire a reputable private investigation company to do a background check,” says private investigator Bo Dietl, whose firm’s clients include investment banks and hedge funds. Dietl’s crew has everyone sign off on an affidavit to allow careful examination into everyone’s financials. “No one is going to sign it if they have something to hide,” says Dietl. “If you have a lot of financial problems then you could have a motive to steal.”

Potential rogue employees with clean records are harder to spot, but even simple strategies such as frequently changing computer system passwords can make a difference says Robert Wasilewski an investment advisor for Baltimore Washington Financial Advisors. “You need someone who overlooks the whole process and can look at trades and reconcile them everyday.”