I did find this on LiveAquaria which would suggest that treating wrasse with formalin shouldn't be a problem, but I would confirm with them that wrasse are not somehow treated differently:
"Disease Prevention
Fish, such as clownfish, prone to common parasitic ailments like Brooklynella hostilis, are given repeated freshwater baths that contain anti-parasite medication. Clownfish are quarantined for a minimum of four weeks at our facility before we offer them for sale. Other fish such as Angelfish, tangs, certain genus of wrasse, and several other specific species are given therapeutic saltwater baths. These baths contain praziquantel or other medications that eliminate flukes, protozoan, and parasites commonly found on wild fish.
To combat common bacterial infections such as Vibrio, therapeutic baths containing antibiotics such as kanamycin, nitrofurazone, Neomycin and other commercial antibiotics are given. Open wounds on fish are treated and healed with a special topical treatment.
In addition to the baths, all quarantined fish are treated with copper sulfate and a 37% formaldehyde solution to combat Amyloodinium ocellatum and Cryptocaryon irritans.
Once they start feeding, all new fish that enter our facility, and can be successfully weaned onto prepared foods, are de-wormed, via frozen food soaked in praziquantel, metronidazole, and piperazine. After the de-worming process, we offer a variety of vitamin-enriched foods to all of the fish. These foods include frozen mysis shrimp, frozen brine shrimp, live ghost shrimp, frozen krill, silversides, roe, dried seaweed, cockle, and even pellet foods. Some species of Anglerfish, Frogfish, Leaffish, Scoprion Fish, and certain species of wild harvested seahorses that require live foods, such as Ghost Shrimp, will be listed with this information in their description when they are posted on the site."
http://www.liveaquaria.com/general/general.cfm?general_pagesid=425