NEW YORK (REUTERS) - Tesla and its chief executive Elon Musk on Thursday (Feb 17) accused the United States Securities and Exchange Commission (SEC) of harassing them with an "endless" and "unrelenting" investigation to punish Mr Musk for being an outspoken critic of the government.

The accusation came in a letter to US District Judge Alison Nathan in Manhattan, who presided over a 2018 SEC settlement stemming from Mr Musk's tweet about a potential buyout of Tesla.

"Mr Musk and Tesla respectfully seek a course correction," wrote Mr Alex Spiro, a lawyer for Musk and Tesla. "Enough is enough."

The SEC declined to comment. In a one-sentence order, Ms Nathan directed the regulator to respond by Feb 24.

Thursday's letter escalates Mr Musk's battle with regulators as they scrutinise his social media posts and Tesla's treatment of workers, including accusations of discrimination.

It followed Tesla's disclosure on Feb 7 that it had received a subpoena from the SEC about its compliance with the 2018 settlement.

The SEC sued Mr Musk in August 2018 after he tweeted he had "funding secured" to potentially take his electric car company private at US$420 per share. In reality, a buyout was not close.

Tesla and Mr Musk settled by agreeing to each pay US$20 million (S$26.9 million) in civil fines, and to let Tesla lawyers vet some of Mr Musk's communications in advance, including tweets that could affect Tesla's stock price. Musk also gave up Mr Tesla's chairmanship.

The latest subpoena was issued on Nov 16, 10 days after Mr Musk polled his Twitter followers on whether he should sell 10 per cent of his Tesla stake, triggering a sell-off.

Chilling speech

In Thursday's letter, Mr Spiro accused the SEC of ignoring its commitment to distribute to shareholders the US$40 million in fines, while instead "devoting its formidable resources to endless, unfounded investigations" into Mr Musk and Tesla.

"Worst of all, the SEC seems to be targeting Mr Musk and Tesla for unrelenting investigation largely because Mr Musk remains an outspoken critic of the government; the SEC's outsized efforts seem calculated to chill his exercise of First Amendment rights," Mr Spiro wrote.

Mr Spiro asked Ms Nathan to schedule a conference to find out why the SEC is "issuing subpoenas unilaterally" without court approval, and why the money is not being distributed.

If the SEC found that Mr Musk violated the settlement, it could ask Ms Nathan to throw it out and reopen the case, or pursue new charges.

The letter was filed eight days after California's Department of Fair Employment and Housing sued Tesla over allegations by black workers that it tolerated racial discrimination at its Fremont, California, plant.

Tesla called that lawsuit misguided. It is also trying to reduce or throw out an approximately US$137 million jury award to a black former elevator operator for subjecting him to a hostile work environment at the Fremont plant.

Separately on Thursday, the National Highway Traffic Safety Administration (NHTSA) opened a formal probe into 416,000 Tesla Model 3 and Model Y vehicles after receiving complaints about unexpected braking tied to its Autopilot system.

Tesla has issued 10 recalls since October, including some under pressure from the NHTSA.

Tesla shares closed US$47.04, or 5.1 per cent, lower on Thursday, to US$876.35 on Nasdaq.