This is a partial transcript from "Your World with Neil Cavuto", January 9, 2004, that was edited for clarity.

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NEIL CAVUTO, HOST: Is the attorney general of New York about to step into dangerous territory? The whole issue surrounds fees that Eliot Spitzer (search) may impose on the mutual fund industry.

Right now we’ve got Bob Olstein with us. He’s the chairman and the chief portfolio guy who does everything. I mean, this guy does everything. He’s had a great return and now he’s saying that Eliot Spitzer, the famed New York attorney general is going too far.

What do you mean, Bob?

ROBERT OLSTEIN, CHAIRMAN, OLSTEIN FINANCIAL ALERT FUND: The Judicial Department shouldn’t be messing with the free enterprise (search) system. We agree that he went after some bad practices in the industry. We think it is overblown; it was an immaterial amount.

That being said, yes, let’s go after these people who are breaking the rules. But let’s not -- this is a non-monopolistic industry. There are 10,000 funds. These are fees that go from zero to 2.5 percent.

CAVUTO: Yes, but you’ve been railing against these fees. And here’s a guy who’s preaching from your choir book.

OLSTEIN: What do you mean railing against these fees? I’ve never railed against any fees. I think it’s a fee enterprise.

CAVUTO: That some of the guys are going a little too far with minor returns?

OLSTEIN: Well, if you are a shareholder, then you sell people with minor returns and you buy people with good returns.

CAVUTO: Good point.

OLSTEIN: And it has nothing do -- look, the index funds, John Bogel, who should be enrolling in Karl Marx University, OK...

CAVUTO: And that’s a little nasty.

OLSTEIN: ... is talking about zero returns for five years and zero fees. The entire fund industry reports after fees. OK? And why don’t people go to the cheapest physician when they are sick? This is a non-monopolistic industry.

CAVUTO: But will you argue that some go too far?

OLSTEIN: Some fees? If they go too far to interfere with returns the market will take care of it. There are 10,000 voices out there.

CAVUTO: You think Spitzer is overstepping his bounds. In the case of Alliance Capital, setting and regulating fees is going too far?

OLSTEIN: I honestly think he’s interfering in the free economic system. I think he was right for fining them, I think he was right for going into these problems in the industry, but you don’t interfere in a free -- it is a dangerous precedent.

CAVUTO: What about the separate situation of the New York Stock Exchange, telling Grasso to give his money back?

OLSTEIN: Well, I didn’t award Grasso his money. And it sounds rather high to me. But I’m not involved in it. The board of directors passed that salary, and you have to go after the board of directors and decide whether or not it was ethical or unethical.

CAVUTO: But there again, has Eliot Spitzer overstepped his bounds?

OLSTEIN: Well, I don’t think Eliot Spitzer started it. I think people have called him in. And don’t forget, this is a political issue.

CAVUTO: Yes. But you are arguing that right now regulators’ zeal is going to do more harm than good.

OLSTEIN: Yes. Look, we had a bad period of time. We had corporate problems back three years ago. We had analyst problems. I have criticized them all.

But now let’s not go out and kill the innocent shareholders of Alliance Capital. They had nothing to do with it. Let’s not get the small shareholder thrown out of Alliance Capital because you are cutting their income. How do you associate criminal activity with fees?

CAVUTO: OK. Bob Olstein, chairman and chief portfolio strategist at Olstein and Associates, one of the best returns in the industry.

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