A broker for Defense Secretary Pete Hegseth reportedly sought to invest in major defense companies just weeks prior to the commencement of President Trump’s war in Iran, a new report has alleged.
According to three people familiar with the matter who spoke to the Financial Times, a Morgan Stanley broker representing Hegseth contacted investment firm BlackRock in February about a potential multimillion-dollar investment in its Defense Industrials Active ETF.
On Feb. 28, Trump began conducting joint strikes with Israel on Iran, killing Supreme Leader Ayatollah Ali Khamenei and starting a new war in the Middle East.
The Financial Times notes that the inquiry was flagged internally at BlackRock, and the investment ultimately did not proceed because the fund was not yet available to Morgan Stanley clients.
The $3.2bn equity fund pursues “growth opportunities by investing in companies that may benefit from increased government spending on defense and security amid geopolitical fragmentation and economic competition.” Its largest holdings include Lockheed Martin, Northrop Grumman and RTX, as well as Palantir.
The Financial Times notes that it is unclear whether the broker representing Hegseth found an alternative defense-focused fund to invest in.
BlackRock, Morgan Stanley, and the Pentagon declined to comment when contacted by the Financial Times.
When reached for comment by the Daily Beast, BlackRock declined to comment. The Daily Beast has contacted the Pentagon and Morgan Stanley for comment. Chief Pentagon spokesperson Sean Parnell wrote on X in response to the Times’ report that the allegation was “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 continued.
“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.”
The defense secretary has been one of the most vocal proponents of Trump’s war with Iran, with the president himself acknowledging that Hegseth was disappointed by the suggestion that the war was close to its end.
“You know, the only two people that were quite disappointed, I don’t want to say this, but I have to,” Trump said during an appearance in the Oval Office last week. “I said, ‘Pete and General Razin Caine, I think this thing is going to be settled very soon,’ and they go, ‘Oh, that’s too bad.’”
“Pete didn’t want it to be settled,” Trump added, laughing.
Hegseth reiterated his stance during the first Pentagon Christian worship service after the war began, opting to pray for “overwhelming violence.”
“Let every round find its mark against the enemies of righteousness and our great nation,” Hegseth said, reading a prayer he attributed to the chaplain who ministered to the soldiers involved in the seizure of Venezuelan President Nicolás Maduro in January.
“Give them wisdom in every decision, endurance for the trial ahead, unbreakable unity, and overwhelming violence of action against those who deserve no mercy.”
He also recited from the Psalms: “I pursued my enemies and overtook them, and did not turn back till they were consumed.”
At least 13 U.S. service members have been killed during the war, and at least 200 more have been injured. More than a dozen U.S. service members were wounded in one Iranian strike on a Saudi air base on Friday alone.
Preliminary figures suggest that over 1900 Iranians have been killed, and more than 24,000 have been injured.
Iran responded to claims that the Trump administration is attempting to manipulate the markets with a Monday social media post from the speaker of Iran’s parliament, Mohammad Bagher Ghalibaf.
“Heads-up: Pre-market so-called ‘news’ or ‘Truth’ is often just a setup for profit-taking. Basically, it’s a reverse indicator,” Ghalibaf wrote on X.
He added, “Do the opposite: If they pump it, short it. If they dump it, go long. See something tomorrow? You know the drill.”
Hours before the post and before markets opened in the U.S., the president had made yet another Truth Social post claiming that talks with Iran were underway.
“The United States of America is in serious discussions with A NEW, AND MORE REASONABLE, REGIME to end our Military Operations in Iran,” Trump wrote, before threatening to obliterate the country’s electricity plants and oil wells, as well as Kharg Island, if a deal on the Strait of Hormuz was not reached.
