U.S. prosecutors accused SAC Capital Advisors LP, one of the country's largest hedge-fund firms, of acting as a criminal enterprise where executives including founder Steven A. Cohen encouraged insider trading on a "scale without known precedent."

The government charged that SAC, which has about $14 billion under management, repeatedly took inside information related to public companies and turned it into trading profits. Prosecutors said the firm encouraged the use of illegal tips and hired traders even after they...