A U.S. judge on Friday approved an agreement between Steven A. Cohen's hedge fund, SAC Capital Advisors, and federal prosecutors to allow the hedge fund to continue to operate while the criminal case against it proceeds.

Manhattan federal Judge Richard Sullivan issued a protective order that requires SAC to hold on to the vast majority of the assets it manages for Cohen.

Though the firm is operating normally, several employees were leaving on Friday as investor redemptions reduced the size of the workforce SAC will need.

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The agreement has been widely expected since Manhattan federal prosecutors filed criminal charges and a civil asset forfeiture claim against the $14 billion fund last month, but it required approval of the judge presiding over the asset forfeiture case.

The order, the court said, serves to preserve the availability of SAC property for civil forfeiture while avoiding undue interference with the legitimate operations of SAC.

The agreement, approved by the judge, requires SAC to maintain 85 percent of the assets held by the firm's management company. A source told Reuters earlier Friday this requirement meant that SAC needed to refrain from disbursing Cohen's money, not the money belonging to outside investors.

When SAC was indicted on July 25, the firm quickly released a statement saying it was working on a formal agreement with prosecutors to keep trading.

Prosecutors that day filed a parallel civil forfeiture action against the firm, seeking penalties for money laundering and arguing illegal profits the firm allegedly reaped from insider trades had tainted the assets with which they were commingled.

SAC has pleaded not guilty. A spokesman for the firm declined to comment. The U.S. Department of Justice also declined to comment.

The firm, which recently managed as much as $6 billion in funds for outside investors, has been returning money to investors who requested it through redemptions.

Friday is the last day of work at the fund for several sales and marketing people who are being let go as SAC is in the process of returning $5 billion in outside investor money by this year's end.

Reports from inside SAC say the firm has been going about "business as usual" since the indictment. Last week, Goldman Sachs Chief Operating Officer Gary Cohn said on CNBC that Goldman was still trading with SAC and that the hedge fund was "an important client" and "a great counterparty."

JPMorgan Chase is also keeping its business relationship with SAC intact, a source familiar with the matter confirmed last week. JPMorgan's stated policy is not to comment on relationships with clients.

News of the formal agreement was earlier reported by the Wall Street Journal.

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