NEW YORK (CNN/Money) - LaBranche suddenly looks much cheaper. But that doesn't mean it's cheap enough to own.

The firm got the rug pulled out from under its share price Tuesday after the California Public Employees' Retirement System launched a class action suit alleging that it and other specialist firms had routinely taken advantage of their inside knowledge on stock pricing to unfairly profit.

Tumbling 71 cents, or 7.1 percent, to $9.32 Tuesday, LaBranche (LAB: Research, Estimates) is trading not far from its lows for the year -- and 65 percent below where it was when the year kicked off.

The Calpers suit is just the latest blow against the specialist system, the New York Stock Exchange's age-old method of matching investors' orders to buy stocks with orders to sell them, which has already fallen afoul of criticism from the Security and Exchange Commission and mutual fund giant, Fidelity.

It's got to the point where, on paper, it looks like LaBranche may have fallen too far. Apply any valuation method you like -- price-to-earnings, price-to-book, price-to-earnings -- and LaBranche looks downright cheap, said Century Shares Trust analyst Kevin Callahan (whose fund owns no position in LaBranche).

But at the same time, it looks downright dangerous. First off, there's no telling how many copycat suits Calpers' action might spawn, or what the eventual costs might be. Calpers says that during the five years covered by the suit, it traded "approximately 3 billion shares of stock on the NYSE, mostly in large block trades through the Specialist Firms, suffering millions of dollars of damage." That is just a fraction of a percent of total trading volume during the period.

Then there are serious questions over whether the specialist system will survive. On other major stock exchanges, the matching of buy and sell orders is done electronically, with no human middleman, and critics maintain that the trading that results is no less orderly.

"The valuation looks interesting, but the business itself -- what's the sustainability of that?" he said. "There's a lot of risk here, but I don't know if you get paid for it."

But betting against LaBranche looks as dangerous as betting on it.

"LaBranche is too cheap to short," said to Seth Tobias, who runs the hedge fund Circle T Partners. "It's very easy to say the specialist system should be abolished and we should go to pure electronic trading, but I would hate to see all human input out of the system."

Tobias is short Goldman Sachs (GS: Research, Estimates), however, in part because he believes that it will need to take a hefty charge on its 2000 purchase of No. 2 specialist firm, Speer, Leeds & Kellogg. Goldman shares have weathered the year far better than LaBranche's, rising 43 percent.