The new ban by the Securities and Exchange Commission (SEC) on the naked short selling of 19 major financial firms sent banking stocks on a sharp rally after it was announced on July 15.

However, Sovereign Society Investment Director Eric Roseman says that by singling out 19 firms, the SEC has left hundreds more financial companies even more vulnerable. Washington Mutual (NYSE:WM), the largest US bank not included in the list, saw its share price plunge 35% last week.

Besides, poor financial supervision and weak government regulation created this mess in the banking sector, not short-selling hedge funds.