Tesla Inc. says regulators are harassing Chief Executive Elon Musk over his compliance with a 2018 regulatory settlement that sought to restrict his use of social media.

The Securities and Exchange Commission is conducting unfounded investigations of Mr. Musk and Tesla, attorneys for the company say in a letter filed Thursday with a federal judge who oversaw the settlement. Tesla disclosed earlier this month that regulators sent a subpoena last year that sought information showing how the company and its CEO complied with...

Tesla Inc. says regulators are harassing Chief Executive Elon Musk over his compliance with a 2018 regulatory settlement that sought to restrict his use of social media.

The Securities and Exchange Commission is conducting unfounded investigations of Mr. Musk and Tesla, attorneys for the company say in a letter filed Thursday with a federal judge who oversaw the settlement. Tesla disclosed earlier this month that regulators sent a subpoena last year that sought information showing how the company and its CEO complied with the terms of the deal.

The SEC hasn’t distributed $40 million in fine money to shareholders allegedly hurt by Mr. Musk’s 2018 tweets that he planned to take Tesla private, according to the letter. The SEC alleged that Mr. Musk’s statements weren’t truthful. The regulator’s 2018 lawsuit eventually led to an unusual agreement that Tesla lawyers would preclear certain of the CEO’s tweets and other public statements.

“The SEC seems to be targeting Mr. Musk and Tesla for unrelenting investigation largely because Mr. Musk remains an outspoken critic of the government,” attorney Alex Spiro wrote in the letter to U.S. District Judge Alison Nathan in Manhattan.

In December, Judge Nathan found that a company appointed to distribute money to shareholders hadn’t sent required status reports and quarterly accounting statements to the court about its efforts. The company, Rust Consulting Inc., told the judge in January that it was still working with the SEC on the distribution plan.

““The SEC seems to be targeting Mr. Musk and Tesla for unrelenting investigation largely because Mr. Musk remains an outspoken critic of the government.””

— Alex Spiro, Tesla attorney

The SEC typically distributes 80% of the funds available in a case to shareholders within two years of the distribution plan being approved, according to the latest SEC annual report.

The SEC didn’t respond to a request for comment.

Mr. Spiro’s letter suggests that Tesla and Mr. Musk regret settling and agreeing to the social-media oversight policy, which Judge Nathan approved. The judge, not the SEC, should determine whether Mr. Musk and Tesla violated the policy or other terms of the settlement, according to Mr. Spiro.

The letter alleges there are serial investigations, including one instance of the SEC closing one probe only to open a new one at almost the same time.

The company decided to resolve the lawsuit because it believed that fine money would go to Tesla shareholders, it says.

“When Mr. Musk and Tesla agreed to the consent decrees in 2018, Tesla was a less mature company,” Mr. Spiro wrote. “Mr. Musk and Tesla understood that settling with the SEC would at last end the SEC’s harassment and, importantly, make this court, and not the SEC alone, the monitor over any perceived compliance issues going forward.”

The letter isn’t the first indication of friction over how Mr. Musk and Tesla follow the social-media policy. SEC attorneys informed Tesla in 2020 that Mr. Musk’s use of Twitter had twice violated the preapproval policy, The Wall Street Journal reported last year.

Of concern were tweets including a May 1, 2020, post in which Mr. Musk said, “Tesla’s stock price is too high imo,” using an abbreviation for “in my opinion.” Tesla’s shares fell after that tweet.

Earlier

In 2021, billionaire CEO Elon Musk reached several milestones across Tesla, SpaceX and Starlink. WSJ reporters Rebecca Elliott and Micah Maidenberg break down some of his biggest moments in 2021 and what’s to come in 2022. Illustration: Tom Grillo The Wall Street Journal Interactive Edition

Write to Dave Michaels at dave.michaels@wsj.com