Canaccord Capital Inc. reported a 30% decline in second-quarter profit, compared with a year ago, as a downturn in capital markets hurt its results.

The investment firm earned $12.4 million in the quarter ended September 30, compared with a profit of $17.8 million a year ago.

Revenue for the second quarter was $154.5 million, down 1% from the same quarter a year ago.

Commenting on the quarter, Paul Reynolds, president and CEO stated “While this was certainly not our best quarter, we were able to generate a reasonable rate of return in a very challenging market environment.”

Canaccord recorded an adjustment of $4.4 million related to third party asset-backed commercial paper to reflect management’s view of current market conditions and the limited liquidity for these notes. The fair value was estimated by management and the adjustment was recorded as a loss within principal trading revenue for the second quarter of fiscal 2008.