Tesla’s Elon Musk mocks SEC as judge demands they justify fraud settlement

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He mocked the agency that he settled a lawsuit with only days earlier, referring to the regulator as the "Shortseller Enrichment Commission" and sarcastically quipping that it was "doing incredible work".

Mr Musk, chief executive of Tesla, described the SEC as the "Shortseller Enrichment Commission" hours after a federal judge ordered him and the agency to justify how they arrived at their settlement. "And the name change is so on point!"

The SEC and Tesla did not immediately respond to requests for comment. The tweet surprised investors, analysts and Tesla's board of directors.

Tesla shares declined by more than 2 per cent to $274.50 in extended trading after Musk's tweet.

Musk's post came nearly a week after he reached a deal with the SEC to settle a lawsuit over tweets he posted August 7 when he said he had secured funding to take the electric auto company private at $420 a share, causing the company's stock to soar.

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Musk agreed in the settlement to pay a US$20 million fine.

Musk's sarcastic tweet could cause Nathan to reject the settlement if it gives her reason to believe that he "has no intention or ability to change his conduct", said Erik Gordon, a business professor at the University of MI.

FILE PHOTO: Tesla Chief Executive Elon Musk stands on the podium as he attends a forum on startups in Hong Kong, China January 26, 2016. "It's what they do", he tweeted.

For her part, Nathan may have limited room to intervene, after a federal appeals court curbed the ability of judges to reject SEC settlements.

"It bolsters the SEC's argument that to the extent he was misrepresenting the facts, that he was [tweeting] to screw with the shortsellers", Alma Angotti, a managing director at Navigant and former SEC senior counsel said.

Musk is a long time critic of what he believes is a bias towards Short Sellers (ask an accountant).

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