No matter how many times corporate apparatchiks tell employees not to say dumb stuff in email, employees say dumb stuff in email--stuff that often looks horrendous out of context.

So it's no wonder that emails are the first thing investigators go after when they start investigating companies.

And, more often than not, the investigators find emails that look horrendous out of context.

Sometimes, importantly, these emails actually are horrendous. Sometimes the emails actually reveal (and prove) wrongdoing, even when they are evaluated in context. Sometimes employees do, in fact, break the law or violate industry rules, and leave definitive proof of these transgressions in email. And in those cases, email is an extremely valuable tool that allows investors (and society) to discover the truth.

But the trouble with email is that sometimes people who aren't, in fact, breaking rules often vent or joke or react to information in emails--and, in so doing, create a "paper" trail that, later, out of context, makes it look like they have broken rules (or at least done something sleazy). And when these emails come out, they are often seized upon as proof of wrongdoing, before they have actually been evaluated in context. And that gets a lot of companies and employees in hot water, even when the employees didn't, in fact, break any rules.

To understand how damning emails can look out of context, you have to actually have gone through the process of having your emails scrutinized after the fact--which I am sad to say I have. A decade ago, New York Attorney General Eliot Spitzer investigated the conflict between research and banking on Wall Street in the 1990s, when I was a tech-stock analyst. Some of my emails looked bad enough that I was later fined and kicked out of the industry.

(For a variety of reasons, I still can't discuss these emails in detail, but my firm and I disagreed with some of Eliot Spitzer's conclusions about them. Spitzer was certainly right about the conflict of interest, and this conflict certainly deserved to be investigated and addressed. But as I testified when Spitzer's investigators interviewed me in 2001, I never wrote a word in a research report that I didn't believe.)

Anyway, the latest batch of emails to come out in a Wall Street scandal are emails from bankers at a division of JP Morgan. In these emails, the bankers seem to reveal that JP Morgan misrepresented the quality of some mortgages that it packaged and sold to investors--including a big firm called Dexia. The emails, which are detailed here in this New York Times story, do indeed look damning. The employees at JP Morgan who wrote them will have some explaining to do.

And if the emails reveal what the investigators think they reveal--that JP Morgan actually defrauded its clients--then JP Morgan and the executives should obviously pay a big price for that.

But if my own experience has taught me anything, it is to reserve judgement about emails until they are evaluated in context.

Because the reality of email is that it is easy for an initial reaction, stressful situation, difference of professional opinion, or other situation to produce documents that look awful in hindsight. And a sense of the broader context often makes these emails seem much less scandalous than they first appear.

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