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As part of broader scrutiny on the People’s Bank of China, monetary-policy chief Sun Guofeng is said to face suspicions of leaking economic data

China’s top anticorruption agency is investigating a senior Chinese central banker for suspected leaking of official economic statistics, say people with knowledge of the matter, after Beijing criticized the central bank for not adequately aligning itself with the party-state.

The Central Commission for Discipline Inspection said Wednesday that Sun Guofeng, who was until earlier this month head of the monetary-policy department of the People’s Bank of China, is being investigated for “suspected serious violation of laws and discipline.” It didn’t disclose any specifics.

The people with knowledge of the matter said the probe is centered on whether Mr. Sun, who had worked at the central bank since the late 1990s, shared macroeconomic indicators, such as those measuring inflation, with individual bond traders at select financial institutions in exchange for personal gains.

The central bank and the Central Commission for Discipline Inspection didn’t respond to inquiries. Mr. Sun, who was taken away by investigators from his office earlier Wednesday, couldn’t be reached for comment.

The investigation is one result of a sweeping round of inspections of some 25 financial regulators, state banks, insurers and investment funds that President Xi Jinping launched late last year to reassert the Communist Party’s authority over these financial stalwarts.

Focused on the relations between these state institutions and private-sector players including individual investors and businesses, the inspections have targeted a large number of individuals, including the former chief executive of China Merchants Bank Co.

The PBOC, which oversees one of the world’s largest financial systems, is arguably the most consequential of all the financial institutions scrutinized by Mr. Xi’s discipline inspectors.

The Chinese central bank, which has never been politically independent like some of its Western peers, needs approval from the top bodies of government before it moves interest rates. But for years the PBOC has worked to establish credibility among investors by trying to communicate with the public more, as China’s markets became more sophisticated and their influence extended across the globe.

During the monthslong disciplinary inspections, however, investigators sternly warned the central bank against any talk of Western-style central-bank independence. In February, after the inspections wrapped up, the anticorruption agency sharply criticized the PBOC, along with other financial regulators, for having “gaps” in implementing major policies of the party leadership.

The agency also noted that there were prominent corruption problems around “key positions” at some financial institutions, without specifying, according to a statement on its website.

Mr. Sun, 49 years old, who has been removed from his post, had spent most of his more than two decades at the central bank with its monetary-policy department, also known as the heart and mind of the PBOC.

With a doctorate in economics from a Chinese university, Mr. Sun conducted research at Stanford University in the early 2000s and published hundreds of academic papers and a well-received English-language book on China’s financial reforms.

A protégé of the current PBOC governor, Yi Gang, Mr. Sun over the years has been heavily involved in remaking China’s central bank into one that keeps up with the pace of modern finance.

He helped develop China’s interbank bond market, where government bonds are traded, and has become increasingly popular with foreign investors. Mr. Sun played a leading role in adding flexibility to the trading of the tightly controlled yuan. He also introduced a cohort of trading instruments into the central bank’s open-market operations to make rates more reflective of market demands and better fulfill the PBOC’s monetary-policy objectives.

People close to Mr. Sun describe him as a mild-mannered, hardworking technocrat who appeared to have increasingly struggled with his workload. His hair turned visibly gray soon after he was promoted to lead the monetary-policy department in 2018.

More recently, Mr. Sun had struggled to maintain what he called “policy discipline,” or a hawkish stance against aggressive monetary easing, while China’s leadership urged more measures to support the faltering economy.

Mr. Sun had believed that credit easing would only exacerbate speculative bubbles and could lead to excessive capital outflows at a time of slow growth, the people close to him said.

Indeed, many economists say the Chinese central bank now faces a complicated challenge of propping up growth in the face of greater pressure on the Chinese currency and outflows. “The PBOC’s room for maneuver is becoming increasingly constrained by rising concerns about a currency depreciation-capital outflow spiral,” said Eswar Prasad, an economics professor at Cornell University and former China head for the International Monetary Fund.

An initial sign of trouble for Mr. Sun emerged late last year when Beijing’s disciplinary inspectors received reports accusing him of sexual harassment, the people said. It is unclear if those allegations would be part of the continuing investigation into his work at the central bank.

Another senior PBOC official hinted at problems with some individuals and institutions inappropriately using privileged information for market trading. “Some key personnel take advantage of capital and information for personal gains,” Sun Tianqi, head of the financial-stability department of the central bank who isn’t related to Sun Guofeng, wrote in an article published in March.

In particular, Mr. Sun of the financial-stability department stressed the need to strengthen regulatory oversight and mentioned macro data such as the consumer-price index, a key gauge of inflation, as particularly vulnerable to leaks. The article didn’t mention any specific officials or other individuals.

Sale to bidder in Asia continues art market’s hot streak after other well-known works drew record prices

Boutique auctioneer Phillips sold a 16-foot-wide, red-and-peach painting by Jean-Michel Basquiat for $85 million in New York on Wednesday. Japanese billionaire Yusaku Maezawa put the untitled 1982 painting up for sale, and an Asian telephone bidder represented by a Phillips representative based in Taipei won it after a four-minute competition.

The sale didn’t break the $110.5 million record for a Basquiat, held by an untitled blue work from 1982 that Mr. Maezawa won in 2017. Still, the red example sold by Phillips reaped a tidy profit for Mr. Maezawa, the mogul behind the e-commerce site Zozotown, who bought the red Basquiat six years earlier for $57.3 million. That represents a 48% return for the collector.

The Phillips auction continued the art market’s hot streak over two weeks of sales that has seen record prices for works like the “Shot Sage Blue Marilyn” and an iconic Man Ray photograph. Buoyed by the art market’s recent strength and Basquiat’s international appeal, Phillips headed into the sale with a measure of confidence, giving the work featuring a devilish figure a $70 million estimate.

The house hedged its bet, signing up an outside investor ahead of the sale to pledge to bid an undisclosed sum for it if no one else stepped up in the moment, guaranteeing the Basquiat would be sold.

Such financial mechanisms, called third-party guarantors, are increasingly common in the auction industry and in several cases helped larger rival Sotheby’s $409 million modern-art sale the night before. Sotheby’s sale amounted to the house’s third-largest single sale total ever. But its success hinged in part on selling several pieces by Pablo Picasso and others to guarantors who only had to place single bids to win.

Market watchers pay attention to the number of bidders who compete for works at the priciest levels because thin bidding can hint at potential cracks in collector confidence. On Wednesday, two bidders vied for the Basquiat—so that could indicate collectors still crave his work at a broad level. The work’s wall-spanning size may also have played a role in its appeal.

Increasingly, millennial collectors are starting to champion a fresh slate of artists born long after Basquiat died in 1988. These include Anna Weyant, whose 2021 “Buffet II” sold to a telephone bidder in Hong Kong for $730,800 over its $150,000 high estimate. Another auction newcomer this season, María Berrío’s 2013 “Burrow of the Yellow,” also sold for $998,000 over its estimate of $400,000 to $600,000.

On Thursday, Sotheby’s will cap the New York spring sales with its own pair of sales offering edgy, newer works that collectively are expected to exceed $222 million.

Firm lost big on meme-stock surge in early days of Covid-19 pandemic

Melvin Capital plans to close its funds and return the cash to its investors, capping a stunning reversal for a firm that lost big on the surge in meme stocks last year and on wagers on growth stocks this year.

In a letter to investors that was reviewed by The Wall Street Journal, Gabe Plotkin, Melvin’s founder, wrote that he reached his decision after conferring with Melvin’s board of directors during a monthslong process of reassessing his business.

“The past 17 months has been an incredibly trying time for the firm and you, our investors,” he wrote. “I have given everything I could, but more recently that has not been enough to deliver the returns you should expect. I now recognize that I need to step away from managing external capital.”

Melvin had been, until last year, one of the top-performing hedge funds—its track record of about 30% a year after fees before 2021 was among the best on Wall Street. It was especially known for its prowess in shorting, or betting against, stocks. In 2015, gains from Melvin’s shorts made up two-thirds of the fund’s 67% returns before fees. Mr. Plotkin bought a minority stake in the National Basketball Association’s Charlotte Hornets, plus a $44 million oceanfront mansion in Miami Beach.

But Melvin’s short positions blew up in January 2021 when individual investors on online forums such as Reddit’s WallStreetBets banded together to push up prices of shares, like those of GameStop Corp. , that Melvin was betting against. At the worst point that month, Melvin, which managed $12.5 billion at the start of last year, was hemorrhaging more than $1 billion a day.

While Melvin had made up some of those losses by the end of the year, its focus on fast-growing companies dealt it further setbacks this year as investors soured on such stocks in the face of rising interest rates. Stock pickers also have blamed losses this year on macroeconomic factors like inflation and the war in Ukraine that have hit the market, instead of companies’ own fundamentals. Melvin’s losses widened.

Melvin this year through April had lost 23%, on top of a 39.3% loss in 2021—a huge hole investors expected could take years to make up if Mr. Plotkin didn’t shut down in the interim. Since its start, it has averaged an 11.9% return.

Still, several investors on Wednesday said they were surprised by the decision.

Melvin’s executives as recently as last week had been asking clients for their thoughts on what new fee arrangements seemed fair to them and to Melvin, people familiar with the firm said. Mr. Plotkin in April tried to do away with Melvin’s so-called high-water mark, a standard industry arrangement in which hedge funds don’t collect performance fees until their clients are made whole from prior investment losses. The proposal was part of a broader restructuring effort meant in part to retain and motivate his team, but it met with resistance.

Some investors were so incensed by the proposal they said they planned to redeem all their money at the first opportunity. Mr. Plotkin withdrew his plan days later and apologized to investors, saying he would consult with all of Melvin’s clients as the firm worked to figure out a new path forward.

Investors had been sharing various proposals they thought would be fair, including one by which Mr. Plotkin would keep the current terms until the end of the year and then implement a modified high-water mark that would have let Melvin collect lower performance fees, people familiar with the firm said.

Mr. Plotkin wrote in the letter, “I have worked tirelessly for 20 years to try to be the best I could be and to build and lead an exceptional team of professionals…Being a steward of your capital requires an unrelenting focus. I am proud of what our team has accomplished since 2007.”

He wrote he expected to return nearly all of his clients’ money by late July. Firmwide, Melvin managed $7.8 billion as of April.

Jonathan Kanter fears hollowing out of American economy amid acquisition spree by buyout groups

The top antitrust enforcer in the US has warned the Department of Justice will take a tougher stance on private equity firms rolling up swaths of the American economy as it targets buyout groups that have largely skirted the watchdog’s scrutiny.

“Sometimes [the motive of a private equity firm is] designed to hollow out or roll up an industry and essentially cash out,” Jonathan Kanter, the head of the DoJ’s antitrust unit said in an interview with the Financial Times. “That business model is often very much at odds with the law, and very much at odds with the competition we’re trying to protect.”

Kanter, who joined the DoJ in November, said buyout groups were “an extremely important part of our enforcement programme” and that a fuller assessment of their deals was “top of mind for me, and . . . for the team”.

His decision to target the sector comes as buyout firms such as Blackstone, KKR and Apollo have grown to become diversified conglomerates controlling vast chunks of the US economy, ranging from retail chains to hospitals and data centres.

Private equity groups, which are sitting on trillions of dollars amassed from their investors, announced a record 14,730 deals last year globally worth $1.2tn, nearly double the previous high set in 2007, according to Refinitiv data.

The boom in dealmaking by private equity firms only reflects a portion of the size of the industry, which has in recent years also become a significant provider of capital to acquire or rescue companies.

Historically, private equity companies were seen as buyers of small assets, which were often sold off by large listed corporations that needed to settle antitrust concerns to secure regulatory approval for deals with rivals. But now the largest private equity groups resemble the industrial conglomerates they used to help break apart.

Kanter is one of several progressive officials appointed by Joe Biden to top antitrust roles as the US president seeks to crack down on anti-competitive conduct in the image of “trust buster” Theodore Roosevelt.

The new cohort of antitrust leaders — which includes Lina Khan, chair of the US Federal Trade Commission — believes lax enforcement and an excessive focus on consumer benefits in recent decades has allowed some businesses to dominate large chunks of the US economy.

In one of his first speeches following his appointment, Kanter warned the DoJ would seek to block more anti-competitive deals rather than pursue complex settlements and lamented a “dearth” of lawsuits addressing monopolistic behaviour, counting a 20-year gap between big cases.

If Kanter follows through on his private equity pledge, it would place the buyout industry alongside tech giants as a key target in the new US antitrust landscape.

“Many of the mergers we’re confronting are as a result of [private equity] roll ups,” Kanter said, referring to buyout firms purchasing and then merging several businesses in the same sector.

One area of focus for the agency is “interlocking directorates”, where executives from a buyout group sit on the boards of multiple, competing companies that they own or control. Such governance arrangements could violate a section of the 1914 Clayton antitrust act, Kanter said, adding: “We’re going to enforce that.”

He also said the DoJ would pay closer attention to private equity’s role as a buyer of assets when the agency orders companies that are merging to divest assets to preserve competition. Kanter has said such a solution is often less effective than blocking the deal outright.

“Very often settlement divestitures [involve] private equity firms [often] motivated by either reducing costs at a company, which will make it less competitive, or squeezing out value by concentrating [the] industry in a roll-up,” he said.

He added: “So in many instances, divestitures that were supposed to address a competitive problem have ended up fuelling additional competitive problems.”

However, experts say applying existing antitrust laws to private equity could be challenging given they are largely tailored to bilateral tie-ups. That is often incompatible with the private equity model, which involves building portfolios with a string of companies that relate to each other in a multitude of ways.

“If we’re going to be effective, we cannot just look at each individual deal in a vacuum detached from the private equity firm,” Kanter said.

Antitrust agencies are looking for new ways to increase scrutiny over private equity. For instance, the DoJ and the FTC are in the process of changing pre-merger notification forms to toughen up disclosure requirements. “[We’re] making sure that we get more information upfront to help us understand . . . the full competitive picture,” Kanter said.

The two agencies are also overhauling merger rules in an effort to crack down on unlawful deals with a renewed focus on buyout groups.

“It’s important that we articulate a tractable, legally sound framework in the merger guidelines, but one that’s broad enough and flexible enough to address issues [including] private equity [or] technology,” Kanter said.

Reduction of state shareholding would be a significant milestone for Bolsonaro government

Growing popularity of decentralised ledger technology presents fresh challenge for country’s censors

In late April, Shanghai’s Tongji University students found rotting pork inside a meal box delivered several weeks into the city’s Omicron outbreak.

The maggot-infested meal struck a chord with the disgruntled Shanghai public weeks into an indefinite lockdown without access to basic food and medical supplies.

One student penned an angry response that quickly became a symbol of silent resistance, spreading across social media platforms. Censors deleted reposts of his outburst on the microblogging site Weibo, but the expletive-laden message was immortalised online after being turned into a small piece of digital art preserved on the blockchain.

The incident spawned a series of non-fungible tokens, a form of digital artwork, which have spread during the Shanghai lockdown as a way to preserve criticism of the city’s Omicron outbreak beyond the reach of censors.

China’s censors have been at the forefront of the information battle during the country’s worst coronavirus outbreak in two years. They have systematically erased critical articles and posts on mainstream social media sites about the heavy burden of the strict lockdown measures.

But the growing popularity of blockchain technology has presented a fresh challenge to the country’s censorship regime. Once data is sent to a blockchain network, it cannot be deleted or altered by higher authorities.

The country’s internet police worked in a frenzy to erase the viral “Voice of April” video from domestic social media, a six-minute protest video documenting the suffering experienced by people in Shanghai cooped up at home.

Just as the video was taken down from Weibo and the messaging app WeChat, tech-savvy netizens uploaded snapshots of the video to the blockchain, casting them into NFTs.

“Censors cannot delete information from the blockchain,” said Barney Tan, head of the school of information systems and technology management at UNSW Sydney.

One Chinese blockchain enthusiast said the technology has become more user-friendly in the past few years, making it easier to upload and read articles on the decentralised database.

“People have been posting critical articles on the blockchain, so the government cannot delete them. It’s happening more now because blockchain technology is getting better,” the person added, who did not want to be named because of the sensitivity of the issue.

But Tan noted that even though censors cannot scrub out information from the blockchain, “they can still block access to it” by preventing people from sharing links on social media.

Chinese citizens have found creative ways to adapt to online life under censorship. The blockchain enthusiast noted that in many of his WeChat groups, friends were sharing censored articles flipped upside down to avoid algorithmic screening.

However, censors are typically only one step behind, quickly discovering the attempts to avoid censorship and ensuring that new leaks of sensitive information do not spark wider online protests.

The goal is to prevent critical posts “from becoming viral or politically mobilised,” explained Rogier Creemers, an expert on China’s digital technology at Leiden University.

Liu Lipeng, who used to work as a censor for Weibo before moving to the US, said censors do not solely rely on deleting posts. “Now they also spread fear” to stop sensitive information leaking online, he said.

In Shanghai, which is now in its eighth week of lockdown, residents have recorded videos of pandemic workers warning them against spreading “false rumours” about life under lockdown.

Liu said the measures had stifled public discussion in Shanghai. China’s censorship has been more effective during the financial city’s current lockdown than during the initial outbreak in Wuhan two years ago, Liu added. He noted that several prominent critics and whistleblowers emerged during the early months of the lockdown, including writer Fang Fang and doctors Ai Fen and Li Wenliang.

“In Shanghai, no one dares to speak up publicly,” Liu said.

This month, a leaked article from a prominent Shanghai law scholar condemning the city’s lockdown policies as unconstitutional appeared to break the silence.

Professor Tong Zhiwei from Shanghai’s East China University of Political Science and Law warned that the city’s lockdown measures would lead to “some kind of legal disaster”. 

“Pandemic protection needs to be balanced with ensuring people’s rights and freedoms,” he wrote, casting doubt on the legality of some of the city’s heavy-handed measures, including forcing residents living in the same apartment block as a positive Covid-19 case to move into centralised quarantine facilities.

Tong’s article circulated on Weibo and WeChat for several hours before censors deleted it. But by that time, it had already been permanently etched into the blockchain.

The article is still visible to people in China with the technological knowhow and time to find it. But experts said that from a censorship perspective, in an age where people are inundated with information, it is enough that the sensitive information has been banished to an inaccessible corner of the internet.

“The information control system is never going to work perfectly. But in China, it works well enough to limit information to a small number of computer nerds,” said Creemers.

“From the perspective of regime integrity and stability, the censors have reached their goal,” he added.