Second quarter market volatility dealt a blow to the earnings of GMP Capital, which has reported net income of $5.1 million in net income, down from $24.1 million in the corresponding quarter last year.

“We’re highly sensitive to market conditions in the mid-cap segment,” said CEO Harris Fricker. “To date, I don’t think its any secret, given what’s happened state-side with the budgetary debacle and the ongoing concerns with sovereign debt in Europe, that the markets continue to be very weak, and activity has been low.”

The company also reported a 41% year-over-year decline in revenue for the quarter, to $67.6 million.

“In our capital markets business, revenue was lower than our expectations and was negatively impacted by reduced investor confidence and declining equity market valuations,” Fricker said. This resulted in lower levels of underwriting activity and reduced institutional trading volumes.

In a conference call with analysts, Fricker remained upbeat on GMP’s expansion plans, including its foray into Australia and its acquisition of New York-based specialty fixed income shop, Miller Tabak Roberts Securities.

“We will continue to build our securities business by a complementary international expansion, with the successful template for Europe now being applied to Australia,” said Harris Fricker. “Our pending acquisition of MTR represents a highly compelling opportunity to create a formidable mid market fixed income franchise by combining MTR’s distribution capabilities with GMP Securities’ proven origination expertise.

The MTR deal is slated to close in the third quarter, and most of the costs associated with the deal have already been booked, according to chief financial officer Christine Drake.

“On the wealth management side, we will continue to work with partners at Richardson GMP and GMP Investment Management to build what we believe to be the most compelling wealth management solutions in their respective market.”

He said Richardson GMP has exceeded the company’s internal plan, and the firm continues to attract assets as new investment advisors join the firm.

The market punished the firm’s stock, which fell nearly 8% in morning trade. There could be hope for shareholders however. The firm announced a 5.6 million share buyback in March and is still roughly 1.1 million shares from reaching that limit.

When asked if the firm would complete this buyback in the third quarter, Fricker was blunt.

“Yes.”