People who invested with Bernard Madoff were greedy and happy to accept high returns without probing too much in the way these were achieved, Hugh Hendry, chief investment officer at hedge fund Eclectica, told CNBC Tuesday.
"I'm sympathetic for people losing money but I think this pejorative term of being greedy still applies," Hendry told CNBC.com. "There was an implicit greed in not questioning and just accepting unnatural returns."
"They didn't show the requisite amount of fear that would have generated the curiosity to investigate," he said, adding that for every one Madoff investor, there were ten who stayed on the sidelines.
Regarding the indirect victims of Madoff, those who didn't know that their money was put in the Ponzi scheme, "shame on their advisors," Hendry said.
"Did you invest with Madoff?" is the first question investors ask their advisors nowadays, and the market is already "de-selecting" the investment advisors who did from those who didn't, he said.
Besides the lack of scrutiny over the numbers, a reliance on respectability is the other facet of the problem, according to Hendry.
"The problem that we had, and Bernie typifies it, is he was respectable," Hendry told "Squawk Box Europe".
"I can't raise money. People say 'look at that crazy guy'." Sometimes, it is the "crazy guy" who makes clients money when others lose it, he added.
Madoff, who confessed to running a Ponzi scheme of more than $50 billion, was sentenced Monday to spend 150 years in prison – a virtual life sentence – after his scheme collapsed amid the financial crisis.
"This is a speculative excess and the excess is a lack of scrutiny. And we see a lack of scrutiny across the board in the pricing of assets," Hendry added.
"There will be more regulation," Hendry said. "I don't think that's necessarily the answer. The banking sector is the most tightly regulated sector, apart from nuclear, in the world. "
- Watch the Hugh Hendry interview above.