If I were in your shoes, I would probably pursue the matter and get to the bottom of it. Even though it's not your own relationship, it affects you and your wife by proxy.
Side point, sadist/masochist refers to pain, usually physical. What you're describing, if it is BDSM related and not abusive, would be more Dominant/submissive. That's not to say there isn't a sadism/masochism aspect also, but just that the humiliation is not that.
What specifically did you ask the wife? I would probably say something like, do you enjoy it when your husband disrespects you in public?
“As I am sure any cat owner will be able to tell you,
someone else putting you in a box is entirely different
from getting into a box yourself.” —bisexualbaker