Is the prosecution of Rajat Gupta--the once esteemed Goldman Sachs director and head of McKinsey who has been charged with insider trading--falling off the rails just a bit? That's the speculation, as word trickles out via the New York Times that the SEC has delayed its trial by six months.

Gupta has not been criminally charged, though the U.S. Attorney in Manhattan is taking a close look at the issues. The delay may be the result of some horse-trading between the SEC and the U.S. Attorney. The latter asked the former to delay its administrative charges against Gupta until after the Raj Rajaratnam trial, in which Gupta figured prominently, though he did not testify. The SEC declined the request for reasons unclear, perhaps they just wanted to be able to say during the trial that Gupta had been charged. But it seems clear that the two sides are negotiating how all this will go down.

The delay took place amid chatter that the government's case against Gupta may not be as strong as once thought. "Certain evidentiary rules could prohibit prosecutors from using two incriminating wiretaps on which Mr. Rajaratnam told colleagues about tips he had received about Goldman. Without those tapes, the government would be forced to rely on more circumstantial evidence at trial--like phone bills and trading records--to establish Mr. Gupta's guilt." It may be that the best chance to win will end up being in the administrative proceeding, where the conviction bar is lower.

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