Zane fraudulently convinces 7 individuals to invest $75,000 each in a business to upgrade the processes in a coal mine in Alabama. He promises that by upgrading the processes, it is capable of increasing profits by 400% and he produces business plans and financial data. The business is not registered with the SEC. Ten months later, a private investigator discovers Zane hiding in Florida with most of the money. Do the 7 individuals have a cause of action against Zane under the Securities Exchange Act of 1934?

a.No, because the security was not sold on the Stock Exchange.

b.Yes. Under Section 10(b), the investors can sue Zane for his fraudulent scheme, even though the security was not registered with the SEC.

c.No, because the security was not registered with the SEC.