An investment broker in Connecticut recently settled with regulators over charges that he inappropriately sold certain annuity products over a period of years, lied on disclosure documents and used his wife as a front for hiding his activities. For these transgressions, the guy received a slap on the wrist – and he wasn’t even punished for his most egregious action – because it was completely legal and permissible. And sadly, it is much too common.

Although the Connecticut broker had no east Tennessee customers, the case is important because this single situation reveals some of the worst aspects of the investment helper industry.

Between 2012 and 2019, William Fochi, Jr. sold $3.9 million of equity indexed annuities in direct violation of his employer’s policies. He avoided detection because he listed his wife as the agent on the sales documents, then lied about the activities eight times on annual disclosure documents. Documents from the Financial Industry Regulatory Authority (FINRA) indicate that Fochi received $3,000 in commissions from the sales and shared in the $300,000 to $400,000 of commissions paid to his wife for the sales.

FINRA suspended Fochi from the investment industry for four months and assessed a $10,000 against him.

This situation is so ugly, it’s difficult to decide where to first direct my indignation.

To its credit, Fochi’s employer, Northwestern Mutual, prohibited its employees from selling unregistered equity index annuities, a product class long associated with deceptive and deficient sales practices. The broker did not accidentally misspeak about selling them; he used his spouse’s name to perpetrate the chicanery and repeatedly lied about it for almost a decade.

A 120-day suspension and $10,000 fine are negligible penalties for these violations. But the puny penalty is not even the most deplorable part of the story.

This guy was paid up to $400,000 for selling $3.9 million of annuities. There is your crime. Except it’s not a crime. It is permissible, heinous – and common.

Ponzi schemes capture our attention because victims usually realize their situation in a sudden shock. But I am convinced that more money is taken from investors by ridiculously high product fees, slowly over decades, than all the money stolen by the Bernie Madoffs and John Ponzis of the world. The investors pay that $400,000 in commissions, slowly, usually without ever realizing it.

And it is completely legal.

Sadly, the regulatory landscape for investment helpers is intentionally complex – so much so that I have never spoken with an elected official or state level regulator who really understands it. Most annuity salesmen aren’t even regulated by a government agency; FINRA is an SRO, a self-regulatory organization, creating the ultimate fox/henhouse situation.

David Moon is president of Moon Capital Management. A version of this piece originally appeared in the USA TODAY NETWORK.