E-mails can and will be held against you.

• Author: Swartz, Nikki
• Position: Up front: news, trends & analysis

It is just commonsense that you should never e-mail something that you wouldn't want your boss to see. But today, you should also remember never to e-mail anything that could be used against you in court.

A U.S. federal judge recently ruled that e-mails written by a J.P. Morgan Chase & Co. senior staff member referring to "disguised loans" could be used as evidence in a civil trial. J.P. Morgan is trying to reclaim more than $1 billion from a group of insurers that guaranteed complex deals between J.P. Morgan and Enron Corp. The e-mails support allegations that the company helped Enron conceal its growing debt before its collapse.

The trial involves a commercial dispute between J.P. Morgan and a group of insurance companies, whose attorneys are arguing that complex securities transactions known as "pre-pays" by J.P. Morgan and other financial institutions enabled Enron to hide its true indebtedness.

In e-mails written by J.P. Morgan executive Donald Layton, the Enron deals are frequently referred to as "disguised loans," and Layton suggests that the deals are accounted for internally as loans, even though externally they are presented as prepaid forward sales contracts of gas. This seems to support the insurers' argument that J.P. Morgan knew the deals were loans but misrepresented them to outsiders--including insurers. J.P. Morgan asked Judge Jed Rakoff to exclude the e-mails from permissible evidence on grounds they were irrelevant and might prejudice the jury.

In May 1999, Layton wrote an e-mail about the bank's use of prepaid commodity transactions: "We are making disguised loans, usually buried in commodities or equities derivatives (and I'm sure in other areas) ... I am queasy about the process."

The bank's pre-pay transactions with Enron are being investigated by the Justice Department, the Securities and Exchange Commission...