GameStop short seller Andrew Left and his firm, Citron Capital, have been hit with charges of fraud by both the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ). The charges are part of an alleged multi-million-dollar fraud scheme, which has garnered attention from fans of the video game retailer who celebrated the news on social media.

According to the SEC, Left and Citron Capital published false and misleading statements regarding their stock recommendations between 2018 and 2020. The SEC alleges that on at least 26 occasions, Left used Citron's newsletter to recommend positions that would benefit his firm's positions. After the stock prices moved as a result of these recommendations, Left and his firm would allegedly reverse their positions to profit from the new stock movement. The SEC claims that this pattern has generated $20 million for Left and Citron Capital.

The SEC complaint also highlights Left's alleged bragging to colleagues about the scheme, describing it as akin to taking "candy from a baby." While the complaint does not suggest that GameStop was one of the manipulated stocks, it highlights how Left took advantage of his readers' trust to trade on false pretenses.

The SEC is seeking financial penalties, conduct-based injunctions, an officer-and-director bar, and a penny stock bar against both Left and Citron Capital. Meanwhile, the DOJ has filed criminal charges, alleging that Left engaged in a securities fraud scheme and made false statements to federal investigators. If convicted, Left faces severe penalties, including up to 25 years in prison for the securities fraud scheme count.

Andrew Left gained notoriety as a short seller through his hedge fund Citron Capital and his newsletter Citron Research. GameStop became a focal point in the meme stock saga, with Left actively betting against its success. However, Keith Gill (also known as Roaring Kitty or DeepFuckingValue) brought attention to the short-selling by hedge funds like Left's, rallying retail investors on Reddit's WallStreetBets to buy GameStop shares and trigger a short squeeze.

While hedge fund Melvin Capital suffered significant losses and had to shut down due to the short squeeze, Left and Citron Capital managed to escape the same fate. Left remained a target of Gill's cult following, which harbored a deep-seated resentment against the traditional financial system after the 2008 financial crisis.

The meme stock movement led to extreme measures, including death threats against short sellers. However, these threats did not deter Left from shorting GameStop. Earlier this year, Left's firm decided to abandon its GameStop short position after another surge in the stock's value. Left's firm criticized the market's "irrationality" and referred to the Roaring Kitty saga as an "insult to the capital markets."

The charges against Left and Citron Capital mark a significant development in the ongoing battle between short sellers and retail investors, as well as the scrutiny on manipulation and fraud in the financial markets. The outcomes of these charges will have implications for the future regulation and oversight of market activities.