They technically break securities laws but the SEC and FINRA do not put any resources toward policing the OTC with the exception of Pump and Dumps and fraudulent trading (to move a stock UP). When it comes to the big manipulator/MMers who are often working for short or market neutral hedge funds it is the wild west.
This is one of the main reasons Rory is determined to uplist to NASDAQ and be done with the slimeball market makers.