A recent Financial Times report alleges that a broker representing U.S. Defense Secretary Pete Hegseth explored substantial investments in major defence companies in the lead-up to a joint U.S.-Israeli attack on Iran. The report, citing three individuals familiar with the situation, claims the broker, working with Morgan Stanley, contacted BlackRock in February regarding a multimillion-dollar investment in BlackRock’s Defense Industrials Active ETF. BlackRock is a global investment management firm. Morgan Stanley is a multinational investment management and financial services company.
The Pentagon has vehemently denied the claims. Chief Pentagon spokesman Sean Parnell labelled the Financial Times story as “entirely false and fabricated” in a statement on X, and demanded a retraction. The Financial Times report stated that the investment discussed by Hegseth’s broker did not proceed, as the fund was not yet available for Morgan Stanley clients.
The report did not specify the level of discretion the broker had in making investments on Hegseth’s behalf, nor whether Hegseth was aware of the broker’s actions. Parnell stated that “Neither Secretary Hegseth nor any of his representatives approached BlackRock about any such investment.” BlackRock declined to comment on the report, while Morgan Stanley has yet to respond to requests for comment.
The allegations surface amidst increased scrutiny of trading activities in financial and prediction markets preceding major U.S. policy decisions. Some of these decisions have been preceded by well-timed investments, raising concerns among experts about potential information leaks.
