Specialist trading firm LaBranche ( LAB) says it returned to its losing ways in the second quarter and expects to post a $23 million loss in the period.

The firm says the estimated loss includes a $5 million operating loss, or 8 cents a share. It also includes a noncash $17 million decline in the value of the firm's restricted shares in the NYSE Group ( NYX), the parent company of the New York Stock Exchange.

LaBranche, one of the largest and oldest specialist trading firms on the NYSE, says the operating loss stemmed from "adverse market conditions'' in May and June. During the quarter, the firm says principal trading revenue totaled about $20 million, down $47 million in the second quarter of 2005.

Specialist firms, which earn commissions for matching buyers and sellers on an exchange, also make money from trades made to smooth out fluctuations in stock prices. The firms are permitted to make proprietary trades for their accounts, but not at the expense of any customer.

The firm's earning warning marks a return to the kind of lackluster performances LaBranche posted during much of the past two years. LaBranche broke that negative trend when it reported sharply higher profits in the fourth quarter of 2005 and the first quarter of this year.

Ironically, most of LaBranche's first-quarter jump in profits stemmed from the sale of NYSE seats as part of the Big Board's merger with Archipelago.

Shares of LaBranche closed $12.43, up 19 cents, or 1.6%, in Thursday trading.