1. **Prohibition of Unfair Competition**

● Issuers have the right to independently choose suitable underwriters according to the law, and underwriters also have the right to autonomously decide whether to accept the issuer's entrustment. The two main ways to establish an underwriting relationship are negotiation and bidding. Driven by the huge potential profits from securities underwriting and facing intense market competition, underwriters may resort to improper competitive methods to solicit underwriting business. In practice, the improper competitive practices mainly include: (1) Catering to or encouraging the issuer to issue securities at unreasonably high premiums; (2) Disparaging peers; (3) Promising the issuer to maintain the market price after the securities are listed; (4) Using administrative measures to interfere with the issuer's independent selection of underwriters; (5) Offering kickbacks to relevant parties; (6) Reducing underwriting fees in violation of regulations or offering free underwriting services.

● Various countries' laws generally prohibit these unfair competitive practices in the securities underwriting process. Accordingly, Article 29, paragraphs 2 and 3, of China's Securities Law stipulates, "Securities companies shall not engage in the following acts when underwriting securities: (i) Making false or misleading advertising or other promotional activities; (ii) Soliciting underwriting business by unfair competition; (iii) Other acts that violate the provisions of securities underwriting business. If a securities company engages in any of the acts listed in the preceding paragraph, causing losses to other securities underwriting institutions or investors, it shall bear compensation liability according to the law."

2. **Due Diligence Obligation for Issuance Documents**

● Public issuance of securities requires the submission of corresponding public offering documents to the securities regulatory department according to the law and the disclosure to the public in accordance with the information disclosure rules. These documents are completed under the auspices of the underwriter, who should have a true understanding of the issuer's situation. Therefore, the law requires securities underwriters to verify the authenticity, accuracy, and completeness of the offering documents to prevent and avoid false records, misleading statements, and significant omissions in the public offering documents. Article 29, paragraph 1, of China's Securities Law clearly stipulates, "Securities companies underwriting securities shall verify the authenticity, accuracy, and completeness of the public offering documents. If any false records, misleading statements, or significant omissions are found, sales activities shall not be carried out; if already sold, sales activities must be immediately stopped and corrective measures must be taken." Therefore, securities companies must carefully verify the relevant documents based on prudent investigation, and this verification work should be carried out throughout the entire underwriting process. If problems are found, they should be corrected in a timely manner, and sales that have already taken place should be stopped, to be resumed only after taking corresponding corrective measures and obtaining approval to resume sales.

3. **Prohibition of Reserve Securities for the Underwriter's Own Company**

● Securities underwriters should make every effort to sell and maintain investors' fair right to subscribe during the underwriting process. Allowing underwriters to reserve securities through their privileges would bring them huge illegal profits and harm investors' interests, affecting the healthy development of the market. Article 31, paragraph 2, of China's Securities Law stipulates, "Securities companies shall ensure that the securities they distribute or underwrite are sold to subscribers first during the distribution or underwriting period and shall not reserve the distributed securities for their own company or pre-purchase and retain the underwritten securities." Pre-purchase and retention generally refer to buying in their own name and account. In practice, some securities companies buy the securities they underwrite through separate accounts or by borrowing others' accounts, and some achieve the purpose of reserving securities through affiliated enterprises' subscriptions. These behaviors should also be included in the scope of underwriters reserving underwritten securities.