Defence Secretary Pete Hegseth's personal broker at Morgan Stanley allegedly approached BlackRock in February about investing millions in a defence-focused fund, weeks before US airstrikes on Iran, according to the Financial Times. The inquiry was flagged internally at BlackRock, but the investment was never made as the fund was not available to Morgan Stanley clients at the time.
The fund in question, BlackRock's Defence Industrials Active ETF, invests in companies that may benefit from increased defence spending. Its largest holdings include RTX, Lockheed Martin, Northrop Grumman, and Palantir. The Pentagon is a major client of these firms.
Department of Defense spokesman Sean Parnell denied the report, calling it 'false and fabricated' on X. He said neither Hegseth nor his representatives approached BlackRock about any investment, and demanded an immediate retraction. Richard Grenell, a former Trump official, dismissed the story as 'high school gossip'.
The allegation comes amid concerns about insider trading related to Operation Epic Fury. A surge in oil market betting was noticed 15 minutes before President Trump announced a halt to bombing for peace talks. The White House denied any profiteering, calling the reporting 'baseless and irresponsible'.
Questions have also been raised about betting apps being used to profit from political events. CNN reported one person made $1 million since 2024 from well-timed wagers on US and Israeli military action against Iran. A mystery gambler earned over $400,000 on Polymarket by correctly predicting the ousting of Venezuelan president Nicolas Maduro hours before US special forces acted.
Hegseth has been a prominent figure in the Iran campaign, taking a leading role in press conferences. Trump recently credited Hegseth as the first to advocate for striking Tehran, saying at a summit: '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 a nuclear weapon.”'
