Amid the widenting conflict in the Middle East, a media report on Monday claimed that a broker for US Defence Secretary Pete Hegseth attempted to make huge investments in major defence companies in the weeks leading up to the US-Israeli airstrikes on Iran.
The Pentagon quickly dismissed the report as “entirely false and fabricated.”
According to the Financial Times, Hegseth's broker at Morgan Stanley reached out to BlackRock in February—days before the war began—about making a multimillion-dollar investment in the asset manager’s defence-focused exchange-traded fund (ETF).
The deal reportedly fell through, as the fund, which launched in May last year, was not yet available for Morgan Stanley clients to purchase, the FT report said, citing sources familiar with the matter.
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BlackRock’s $3.2 billion equity fund focuses on companies expected to benefit from increased government spending on defence and security amid rising geopolitical tensions. Its top holdings include defence giants RTX, Lockheed Martin, Northrop Grumman, and data analytics firm Palantir—companies with close ties to the US Department of Defence.
The FT report did not confirm whether Hegseth was aware of the broker’s actions. However, Pentagon spokesperson Sean Parnell rejected the report, stating that neither Secretary Hegseth nor his representatives had approached BlackRock for such an investment.
The report comes amid growing scrutiny of trades in financial and prediction markets ahead of major policy decisions by US President Donald Trump. As Secretary of Defence, Hegseth has consistently promoted America’s military capabilities, particularly following its military action against Iran.
The joint US-Israeli airstrike on Iran, which began on February 28, resulted in the deaths of several high-ranking Iranian officials, including Supreme Leader Ayatollah Ali Khamenei, and caused significant damage to Tehran’s military infrastructure.
In retaliation, Iran targeted neighboring Gulf countries hosting US military bases, igniting a broader conflict in the region. Tehran also disrupted shipping through the Strait of Hormuz, a key global oil chokepoint, causing turmoil in global markets and driving a sharp spike in oil prices.