Abstract: The domestic market system is not only the instinct reason of the invalidation of the underwriter's reputation certification in China, but also the key factor of China underwriter's traded-based manipulation. In this paper, a model about China underwriter's reputation is set up to analysis the reputation formation and the impact of the traded-based manipulation and the system factor. The set up results indicate that the SEO traded-based manipulation makes China underwriter's certification invalid. One bad state is the consistency of the delinquency, another is a vicious circle similar to the cobweb theory, that the lower underwriter incline to due diligence instead, completely different form the mature market's certification effect. So that a new model is given for the invalidation of the underwriter reputation certification effect in China, and at the same time the governors can perfect the domestic underwriter's reputation mechanism.

Key words: underwriter, traded-based manipulation, reputation certification, due diligence report, seasoned equity offering(SEO)