Hegseth's Broker Accused of Seeking Defence Investment Before Iran Strikes
Defense Secretary Pete Hegseth's personal broker allegedly approached a major asset manager about making a multimillion-dollar investment in defence companies in the weeks leading up to the airstrikes on Iran, according to a report by the Financial Times. The newspaper, citing three sources familiar with the matter, claims that Hegseth's broker at Morgan Stanley contacted BlackRock in February to inquire about a significant investment in its Defense Industrials Active ETF.
High-Profile Inquiry Flagged Internally
The inquiry from such a prominent client was flagged internally at the asset manager, the FT reports. The investment was ultimately never made because the $3.2 billion equity fund in question was not available for Morgan Stanley clients to purchase at that time. The fund specifically targets growth opportunities by investing in companies that may benefit from increased government spending on defence and security amid geopolitical fragmentation and economic competition.
Its largest holdings include defence conglomerates RTX, Lockheed Martin, and Northrop Grumman – all of which count the Pentagon among their biggest clients – as well as Peter Thiel's data integration company Palantir.
Pentagon Denial and Demand for Retraction
Department of Defense spokesman Sean Parnell responded to the story in a post on X, calling it "false and fabricated" and demanding an immediate retraction. Parnell wrote: "This allegation is entirely false and fabricated. Neither Secretary Hegseth nor any of his representatives approached BlackRock about any such investment. This is yet another baseless, dishonest smear designed to mislead the public."
Parnell also reposted an attack from Trumpworld veteran Richard Grenell, who dismissed the FT's report as "high school gossip." The Pentagon, Morgan Stanley, and BlackRock have all been contacted for comment, with neither financial house offering any response to the FT prior to publication.
Broader Concerns About Insider Trading
This allegation emerges amid growing concerns about insider trading related to Operation Epic Fury. Last week, a surge in betting on oil markets was noticed just fifteen minutes before President Donald Trump announced a temporary halt to the U.S. bombing campaign on Truth Social to allow for peace talks. The White House moved swiftly to deny any profiteering had occurred, with a spokesperson stating: "The White House does not tolerate any administration official illegally profiteering off of insider knowledge."
Questions have also been raised about individuals using online betting apps to profit from contemporary political events. CNN recently reported that one person has made $1 million since 2024 from placing well-timed wagers on upcoming military action by the U.S. and Israel against Iran. In another instance, a mystery gambler earned over $400,000 on Polymarket in January by correctly forecasting the ousting of then-Venezuelan president Nicolas Maduro hours before U.S. special forces swept into Caracas.
Congressional Efforts and Political Context
Several members of Congress have attempted to crack down on politicians profiting from events about which they might have privileged information. House Administration Committee chair Bryan Steil is the latest to propose a bill to that effect. Meanwhile, Hegseth has served as one of the public faces of the attack on Iran, taking a more prominent role than either Vice President JD Vance or Secretary of State Marco Rubio.
During combative press conferences in the Pentagon briefing room, Hegseth has sparred with the media, accusing journalists of being insufficiently positive in their coverage of U.S. military might. President Trump has attempted to shift credit for the onslaught onto Hegseth, stating at a law enforcement summit in Memphis last week that his defense secretary was the most passionate advocate for striking Tehran.
"Pete, I think you were the first one to speak up and you said, 'Let's do it because you can't let them have a nuclear weapon,'" Trump recounted. The conflict, now in its fifth week, has resulted in 13 U.S. service members killed, over 200 injured, and costly equipment destroyed, including an Air Force E-3 Sentry aircraft brought down by an Iranian drone over Saudi Arabia.
