From the files of the perverse incentives:

Richard Strong, eponymous founder of Strong Financial Corporation, sold his shareholders up the river. His fund company was one of the first -- along with Bank of America (NYSE:BAC), Janus (NYSE:JNS), and BankOne (NYSE:ONE) -- to be implicated in the late-trading and market-timing scandal with hedge fund Canary Capital. The SEC and the attorneys general of Wisconsin and New York then charged him with rapidly trading in and out of his own funds, taking advantage of information about their performance that he had as an insider.

The technical word for this sort of thing is a "no-no."

This past week, Strong accepted a lifetime ban from the securities industry and a fine of $60 million. In an apology to his company's shareholders, he said: "Throughout my career, I have considered it to be my sacred duty to protect my investors; and yet in a particular and persistent way I let them down." He went on to admit, "In previous years, I frequently traded the shares of the Strong funds, at the same time that the advice which we gave our investors was to do the opposite and to hold their shares for the long term... My personal behavior in this regard was wrong and at odds with the obligations I owed my shareholders, and for this I am deeply sorry."

Sixty million dollars is a pretty sharp penalty, right? Keep in mind that Strong was allowed to hold onto his 85% stake in the company, which today Wells Fargo (NYSE:WFC) agreed to buy for a reported $500 million, plus another $200 million in bonuses tied to his ability to retain assets under management. Neither company commented on the exact terms, so I'm going third hand.

Does $60 million still sound like a difficult amount for Strong to pay? Let's see, 85% of $700 million is almost $600 million. Some taxes, tags, and transaction fees off the top... and, oh, Mr. SEC, is a personal check OK for the full amount? Strong's got a shekel or two left.

I'm sure Dick Strong is sorry he got caught. I'm sure he's sorry that his reputation has been hammered. I'm sure he's sorry that the money he will get for his company is so much lower than he would have received had he not abrogated his shareholders' fiduciary trust in him. But a couple of hundred million in the bank will go a long way to soothe those pains.

Until regulators make breaking securities laws so painful as to make the consequences of getting caught unimaginable, the long money's on the side of continued fraud.

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Bill Mann owns none of the companies mentioned in this article.