The report surfaced just days after US President Donald Trump seemed to attribute the decision to carry out military strikes on Iran to Defense Secretary Hegseth.
Citing sources familiar with the matter, the Financial Times reported that the broker for US Defense Secretary Pete Hegseth attempted to make a substantial investment in major defense companies just weeks before a potential US-Israeli strike on Iran.
However, the Pentagon has described the report as “completely false and fabricated” and has demanded its retraction.
According to the FT report, Hegseth’s broker at Morgan Stanley contacted BlackRock in February—days before the anticipated US-Israeli strikes on Iran—seeking to make a multi-million-dollar investment in the asset manager’s Defense Industrials Active ETF.
The report states that the inquiry, made on behalf of a high-profile potential client, was flagged internally at BlackRock. The publication did not specify the extent of the broker’s authority to make investments on Hegseth’s behalf, nor whether Hegseth was aware of the broker’s actions.
However, it also noted that the investment ultimately did not proceed because the fund—which launched in May of last year—was not yet available for purchase by Morgan Stanley clients.
According to BlackRock, the $3.2 billion equity fund, listed on Nasdaq, “seeks 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 reportedly include major defense conglomerates—RTX, Lockheed Martin, and Northrop Grumman—which count the US Department of Defense as their primary customer, as well as data integration specialist Palantir.
The fund, which trades under the ticker IDEF, rose 28 percent last year; however, rather than rallying due to the conflict in the Middle East, it declined by approximately 13 percent last month.
As of now, neither BlackRock nor Morgan Stanley has issued a statement regarding this matter.
Pentagon’s Denial
Immediately following the publication of the report, Pentagon Chief Spokesperson Sean Parnell wrote on the social media site X, “This allegation is completely false and fabricated.”
He stated, “Neither Secretary Hegseth nor any of his representatives contacted BlackRock regarding any such investment,” and demanded a retraction of the report.
This report regarding the attempted investment comes amidst a major investigation into trades executed in financial and prediction markets prior to significant policy decisions made by US President Donald Trump.
Some of these decisions were timed fortuitously, leading certain experts to question whether information had somehow been leaked prematurely.
US Defense Chief Advocated for War
Hegseth is one of the key planners behind the war with Iran, frequently showcasing US military might. Last week, US President Donald Trump attributed the decision to launch military strikes against Iran to his Defense Secretary.
Speaking at a public event in Tennessee on March 23, Trump remarked that Hegseth was the first senior official in his administration to advocate for military action against Iran.
“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 nuclear weapons,'” Trump said, as Hegseth sat beside him at the event.