Pentagon dismisses report that Pete Hegseth's broker sought defence fund investment before Iran attack
Pentagon rejects claims that Defence Secretary Pete Hegseth’s broker sought a defence ETF investment before the Iran strike, as scrutiny grows over timing, Wall Street links and potential conflicts of interest.
A broker acting on behalf of Pete Hegseth, the US Defence Secretary, reportedly attempted to secure a multimillion-dollar investment in a major defence-focused fund in the weeks before US-Israel launched military strikes against Iran, a disclosure that the Pentagon has moved swiftly to deny.
Official account for the Assistant to the Secretary of War for Public Affairs Sean Parnell posted on X (formerly Twitter), “This allegation is 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.”
What the Financial Times Reported
According to a Financial Times investigation, published on Monday, citing three people familiar with the matter, Hegseth's broker at Morgan Stanley approached BlackRock in February about purchasing a significant stake in the asset manager's Defense Industrials Active ETF.
The timing of the inquiry, which came shortly before US and Israeli forces launched coordinated military action against Tehran, has drawn immediate scrutiny from financial analysts and ethics watchdogs alike.
The approach from the broker on behalf of the high-profile potential client was flagged internally at BlackRock, according to the FT report. BlackRock, Morgan Stanley and the Pentagon all declined to comment on the matter.
What Is the IDEF Fund?
The fund in question, which trades under the ticker IDEF on the Nasdaq, is a $3.2 billion equity vehicle that, according to BlackRock, 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 defence conglomerates RTX, Lockheed Martin and Northrop Grumman, all of which count the US Department of Defense as their single biggest customer, alongside data integration firm Palantir. The fund has risen 28% over the past year, though it has shed nearly 13% in the past month, suggesting it has not benefited from the immediate market reaction to the Middle East conflict.
Why the Investment Did Not Proceed
The transaction ultimately did not go ahead, albeit for administrative rather than ethical reasons. The IDEF fund, which only launched in May of last year, was not yet available on Morgan Stanley's client platform at the time of the inquiry. Although exchange-traded funds are designed to be as accessible as individual stocks, the sheer volume of such instruments, now exceeding 14,000 globally, means most major brokerages carry only a subset of available options.
It remains unclear whether Hegseth's broker subsequently identified an alternative defence-focused investment vehicle.
Hegseth's Role in the Iran Campaign
The financial questions arrive at a particularly sensitive moment. Hegseth has been identified by US President Donald Trump as the first member of his national security team to advocate forcefully for military action against Iran, and the Defense Secretary has been among the most vocal champions of the campaign within the administration.
A Pattern of Financial Scrutiny on Wall Street
The revelations are part of a broader pattern that has unsettled financial markets and regulators. Wall Street analysts have, in recent months, been closely examining trading activity in financial instruments and prediction markets in the lead-up to major decisions taken by the Trump administration, raising questions about the flow of non-public information.
ETFs have surged in popularity among individual investors owing to their lower fee structures, more favourable tax treatment compared with mutual funds, and the ease with which positions can be entered and exited.
Pete Hegseth's Net Worth and Assets
Hegseth's financial profile offers additional context. During his tenure at Fox News from 2022 to 2024, he earned $4.6 million in salary, according to a disclosure form submitted during his Senate confirmation process.
That period also saw him collect nearly $500,000 in book advances, between $100,001 and $1 million in royalties, and close to $900,000 in speaking fees.
Hegseth's most recent financial disclosure, released in June 2025, revealed that he sold stock in 29 companies, with individual sale values ranging from $1,001 to $50,000.
About the Author
Sayantani Biswas is an assistant editor at Livemint with seven years of experience covering geopolitics, foreign policy, international relations and global power dynamics. She reports on Indian and international politics, including elections worldwide, and specialises in historically grounded analysis of contemporary conflicts and state decisions. She joined Mint in 2021, after covering politics at publications including The Telegraph. <br> She holds an MPhil in Comparative Literature from Jadavpur University (2019), with a specialisation in postcolonial Latin American literature. Her research examined economic nationalism through Eduardo Galeano’s Open Veins of Latin America. She also writes on political language, cultural memory and the long shadows of conflict. <br> Biswas grew up in Durgapur, an industrial town in West Bengal shaped by migration, which drew families from across India to the Durgapur Steel Plant. As the only child in a joint family, she spent years listening—almost obsessively—to her grandparents’ testimonies of struggle, fear and loss as they fled Bangladesh during the Partition of 1947. This formative exposure to lived historical memory later converged with her training in Comparative Literature, equipping her to analyse socio-economic structures and their reverberations. <br> Outside the newsroom, she gravitates towards cultural history and critical theory, returning often to texts such as Paulo Freire’s Pedagogy of the Oppressed. As a journalist, she is committed to accuracy, intellectual rigour and fairness, and believes political reporting demands not only clarity and speed, but historical depth, contextual precision, and a disciplined resistance to spectacle.
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