Defense Secretary Pete Hegseth’s personal broker allegedly approached a major asset manager about making a multimillion dollar investment in defense companies in the weeks leading up to the airstrikes on Iran, according to a report.
The Financial Times, citing three people familiar with the matter, has alleged that Hegseth’s broker at Morgan Stanley reached out to BlackRock in February to inquire about making a significant investment in its Defense Industrials Active ETF.
The inquiry from such a high-profile client was flagged internally at the asset manager, the FT writes, and the investment was ultimately never made as the $3.2 billion equity fund in question was not at that time available for Morgan Stanley clients to buy.
Department of Defense spokesman Sean Parnell responded to the story in a post on X (Twitter) by calling it “false and fabricated,” demanding an immediate retraction.
The fund concerned pursues “growth opportunities by investing in companies that may benefit from increased government spending on defense and security amid geopolitical fragmentation and economic competition,” according to BlackRock.
Its largest holdings include the defense conglomerates RTX, Lockheed Martin and Northrop Grumman – which count the Pentagon among their biggest clients – as well as Peter Thiel’s data integration company Palantir.
In his denial, 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. We demand an immediate retraction.
“Secretary Hegseth and the Department of War remain unwavering in their commitment to the highest standards of ethics and strict adherence to all applicable laws and regulations.”
Parnell also reposted an attack from Trumpworld veteran Richard Grenell, who dismissed the FT’s report as “high school gossip.”
The Independent has contacted the Pentagon, Morgan Stanley, and BlackRock for comment. Neither financial house offered any response to the FT prior to publication.
The allegation comes amid concern about insider trading relating to Operation Epic Fury after a surge in betting on oil markets was noticed last week just 15 minutes before President Donald Trump announced a temporary halt to the U.S. bombing campaign on Truth Social to allow for peace talks to take place.
The White House moved swiftly to deny that any profiteering had taken place, with a spokesperson stating: “The White House does not tolerate any administration official illegally profiteering off of insider knowledge, and any implication that officials are engaged in such activity without evidence is baseless and irresponsible reporting.”
Questions have also been raised about people using online betting apps to profit from contemporary political events, with CNN reporting recently 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 more than $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 and removed him from power.
Several members of Congress have attempted to crack down on politicians themselves profiting from events about which they might have privileged information in advance, with House Administration Committee chair Bryan Steil the latest to propose a bill to that effect.
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 and sparring with the media during combative press conferences in the Pentagon briefing room, at which he has accused journalists of being insufficiently positive in their coverage of U.S. military might.
Trump has meanwhile attempted to shift the “credit” for the onslaught onto Hegseth, saying at a law enforcement summit in Memphis last week that he had called around his top brass taking soundings on whether to strike Tehran and received the most passionate response from his defense secretary.
“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 said.
