In the lead-up to the joint US-Israeli military action against Iran, a broker linked to US Defense Secretary Pete Hegseth reportedly sought to invest significantly in prominent defense companies, as per the Financial Times and sources familiar with the situation. Chief Pentagon spokesman Sean Parnell swiftly denounced the story as baseless and urged a retraction.
According to the Financial Times, Hegseth’s Morgan Stanley broker approached BlackRock in February to explore a substantial investment in the asset manager’s Defence Industrials Active ETF shortly before the military operation on Tehran. However, the investment did not proceed as planned since the fund, established in May of the previous year, was still unavailable for purchase by Morgan Stanley clients.
The report did not clarify the extent of the broker’s authority to invest on behalf of Hegseth or whether Hegseth was aware of the broker’s actions. Parnell emphasized that neither Hegseth nor his representatives had initiated discussions with BlackRock regarding such an investment. BlackRock opted not to comment on the matter, and Morgan Stanley had yet to respond to Reuters’ inquiry.
This investment incident surfaces amidst broader scrutiny of trading activities in financial and prediction markets ahead of significant policy shifts by US President Donald Trump. Timely investments preceding some of these policy decisions have raised suspicions among experts regarding potential leaks of confidential information.