Federal prosecutors say that they are likely to file  new criminal charges against Rajat K. Gupta,  in the insider trading case against the former head of the consulting firm McKinsey & Company.

In a hearing held yesterday, Judge Jed Rakoff, heard lawyers for Mr. Gupta and prosecuters spar on a range of issues including whether or not the court should dismiss certain counts against their client, suppress the use of wiretap evidence and force the government to clarify its indictment. Mr. Gupta, who sat on the boards of P&G and Goldman Sachs is accused of divulging confidential information about those companies to his friend Raj Rajaratnam, the convicted former hedge fund manager now serving an 11-year prison term. On the wiretap issue, Judge Rakoff indicated that chances were slim that he would bar the government from playing secretly recorded phone conversations at Mr. Gupta’s trial. His lawyers are arguing that the law does not permit federal authorities to use wiretaps in insider trading cases. Judge Rakoff cited the Rajaratnam trial, in which Judge Richard J. Holwell allowed the government to use wiretap evidence.

Gupta is preparing for an April 9 trial.  [Reuters 1/5/12]