As the sordid tale of Bernard Madoff continues to unspool, it has become increasingly clear that somebody -- in fact, a lot of somebodies -- were asleep at the switch. Beyond the standard warning signs, like Madoff's incredible secrecy, his surprisingly consistent rate of return, and the clubby nature of his selling staff, there were far more obvious portents. For example, Madoff's chief compliance officer was his brother Peter, and one of the compliance attorneys was his niece. For that matter, the fact that Harry Markopolos, a Boston accountant, has been urging the SEC to investigate Madoff for the last nine years should have been a hint. The same, of course, goes for the 2006 SEC investigation that found violations, but didn't feel obliged to take any substantive action.

As the SEC attempts to assign blame in finest Three Stooges form, it's worth noting that this is hardly the first time that a lack of serious governmental regulation has reared its ugly head this year. At the moment, mobs are currently clamoring for Dick Fuld's head, with a healthy side order of Hank Greenberg, John Thain, John Mack, Lloyd Blankfein, Jimmy Cain, and pretty much everyone who works in New York's financial district. The general perspective seems to be that these men engaged in business practices that ran the gamut from risky to actionable and now should be forced to pay for the economy that they have ruined.

Ruling that it's not in their jurisdiction an appeals court rejected a New York state law that would have required airlines to provide food, clean toilets, water, and fresh air to passengers stranded on a plane that's been delayed. The NY law came in response to last winter's fiasco at JFK airport when multiple airlines, most notably JetBlue Airways Corporation (NASDAQ:JBLU) were stuck on the runway for 10 hours and passengers had no food, or clean toilets.

According to an AP report: "The court said that while the goals of the law were "laudable" and the circumstances prompting its adoption "deplorable," only the federal government has the authority to pass such regulations.

"If New York's view regarding the scope of its regulatory authority carried the day, another state could be free to enact a law prohibiting the service of soda on flights departing from its airports, while another could require allergen-free food options on its outbound flights, unraveling the centralized federal framework for air travel," the court wrote.

MOST NOTEWORTHY: U.S. refiners, Rigel Pharma and JetBlue were today's noteworthy upgrades:

• Goldman upgraded the U.S. Refiners to Attractive from Neutral, citing valuations; the firm raised its rating on CVR Energy (NYSE:CVI) and Holly Corp (NYSE:HOC) to Buy from Neutral.
  
• Lehman upgraded shares of Rigel Pharma (NASDAQ:RIGL) to Overweight from Equal Weight following the company's positive R788 data.
  
• Bear Stearns said the Lufthansa (DLAKY) investment gives JetBlue (NASDAQ:JBLU) some breathing room to execute on its turnaround but notes the company's long-term strategy remains in question. Bear raised its rating on JetBlue to Peer Perform from Underperform.

OTHER UPGRADES:

• UBS upgraded Disney (NYSE:DIS) to Buy from Neutral.
  
• Wachovia upgraded Jack in the Box (NYSE:JBX) to Outperform from Market Perform.
  
• Jefferies upgraded United Online (NASDAQ:UNTD) to Buy from Hold.

Shares of JetBlue Airways Corp. (NASDAQ: JBLU) are soaring after reports that Lufthansa (OTC: DLAKY) is planning to buy about a 25% stake in the discount carrier.

"The interest from Lufthansa, which is based in Germany, is the latest example of foreign investors leveraging the strength of the euro against the dollar," according to the New York Times' DealBook blog. "By limiting its stake to 20 percent, Lufthansa would remain below federal limits on foreign ownership of a domestic airline. Though the investment will be passive, these people told DealBook, it opens up an opportunity for Lufthansa to make a bigger deal down the road, possibly some kind of partnership."

The investment may be the shot in the arm the Forrest Hills, NY-based company needs as it faces increased competition from the likes of Virgin America and Southwest Airlines Co. (NYSE: LUV). Maybe it will help JetBlue expand to additional markets which should give Southwest some serious competition.

Be forewarned, investing in airline stocks is like checking bags in at the airport. People expect the worst and hope for the best.

We recently took a look at the Best & Worst of 2007 in sixteen categories and asked you to vote for your favorites, as well as sharing the reasons for your picks and any other contenders we may have overlooked. And voting is off to a strong start, with more than 100,000 votes in each category so far.

Some categories have shaped up to be close races. Chuck Prince, Bill Ford, and Bob Nardelli each have a little less than a third of the vote for Best CEO Departure of the Year. Britney Spears and Michael Vick are neck and neck as the Celebrity Most Likely to Lose It All, while Lindsey Lohan's relatively low profile recently has garnered her just 6 percent of that vote. In the Most Shameless Attempt at Cashing in on '15 Minutes', Sanjaya Malakar has a slim lead over Howard K. Stern/Larry Birkhead, but poor Chris "Leave Britney Alone!" Crocker has gotten no respect with a mere 6 percent of the vote. McDonald's has a small lead as the Hottest Chain Restaurant, thought Chipotle isn't far behind with more than a quarter of the vote. And while the iPhone has the lead now as the Hottest Gadget of the Year, it and the Nintendo Wii have been trading places as the front runner.

Hilary: great smile, great dimples, and best of all, GREAT calls... (Sorry, I just can't be PC -- not in a blog.)

Hilary Kramer (HK) in her stock blog, HilaryOnStocks, has changed direction and decided to make people money by saving them some money, suggesting it may be time to bail out of certain holdings. Generally speaking, her comments on the 10 stocks she reviewed were very good.

However, I must take exception to the overall principle of trading in and out of stocks because that may not be smart for certain investors. For example, she suggests that Apple may be over, with its long run-up behind it and that taking some profits is in order. I made a similar argument last week.

More in depth review might reveal that if you got in early and live in a high tax state like California you are looking at losing 22% to 24% of your gain to taxes when you add the state tax to the federal capital gains tax and then add up the transaction fees. So while HK is correct that Apple may start moving lower, the question is by how much?

Also, you must consider where you will put the money when you get it. And if you put it in cash or short-term investments, then when will you get back into the market and what will you buy? And you will be putting back 25% less perhaps.

I am not against paying taxes or rotating out of questionable companies, but you must always look at the broad picture as it applies to your own situation.

Here's my take on the 10 stocks she suggests selling:

Home Depot (HD) and KB Homes (KBH): Solid companies and while they my lag for a while, if you got in at the right price they can be good core holdings depending on your personal circumstances.

Carnival Cruise Lines (CCL), Coach (COH), Gap (GPS), General Motors (GM): You don't need to bother with them now.

Apple (AAPL) and Hewlett Packard (HPQ): Big maybes.

Krispy Kreme (KKD) and Jet Blue (JBLU): No reason to own in any market!

Also check out my recent posts: "Dividends are very sexy -- no joke" and "A bad rap for a bad market"