That practice is a direct violation of our local (Great Boston area) MLS rules & regs which requires that our listings be entered to the system within 24 hours of contract. We are also required to update the status of said listing within 24 hours of any change of status, (i.e. under agreement, canceled, sold, etc).
More importantly, unless the Seller (client) has specifically instructed their broker NOT to enter the listing into MLS within that timeframe, that Broker would be in violation of his/her fiduciary obligation to that client to market the property in the best interest of that client.
Bottom line, if you suspect this practice, contact the broker of record (owner of agency or responsible party) and inquire. You can also contact the local Board or REALTORS with any ethics complaint and I encourage you to do so.
Back in 2004 & 2005 when the real estate market was a feeding frenzy, this was fairly common practice. These listings were called "pocket listings" or exclusive. In our current market, holding homes from MLS is really a detriment to the seller, unless they are okay with an enormous lack of exposure. Some very successful real estate agents have such a large network of buyers and sellers, sometimes they can put deals together within their own "sphere." But, like I said, this market really isn't ideal for this sort of arrangement. I hope this answers your question.