Allegations of Defence Secretary Investment in Defense ETF Prompt Pentagon Retraction Demand
A recent report by The Financial Times has alleged that a broker representing US Defence Secretary Pete Hegseth explored a multi-million-dollar investment in a defense-focused exchange-traded fund (ETF) in the weeks leading up to the US-Israeli military campaign against Iran.
In response, the United States Department of Defense (DoD) has demanded an immediate retraction of the report, with Pentagon spokesman Sean Parnell calling the allegations "entirely false and fabricated."
The Allegation: Investment Exploration by Hegseth's Broker
According to The Financial Times, citing three unnamed sources, a Morgan Stanley broker acting on behalf of Defence Secretary Pete Hegseth contacted BlackRock in February regarding a potential allocation into its Defense Industrials Active ETF.
This fund is specifically designed to capitalize on growth opportunities in companies that benefit from increased defense spending. Its holdings include major US defense contractors like RTX, Lockheed Martin, and Northrop Grumman, as well as data and defense technology firms such as Palantir.
The report noted that the alleged investment did not proceed. The reason cited was that the specific fund was not available for purchase through Morgan Stanley’s platform at that time. It remains unclear whether any alternative defense-related investments were subsequently pursued.
The Financial Times highlighted that the timing of this reported interest occurred as Hegseth held a significant role in shaping US policy toward Iran and had supported military action.
While the report did not indicate any wrongdoing, it suggested the timing could draw scrutiny regarding the intersection of public office and financial market exposure in sectors directly influenced by government policy.
Pentagon Demands Immediate Retraction
Pentagon spokesman Sean Parnell publicly requested an "immediate" retraction of The Financial Times report. Parnell asserted on social media that the allegation is "entirely false and fabricated," stating unequivocally that neither Hegseth nor his representatives approached BlackRock about such an investment.
He characterized the report as a "baseless, dishonest smear." Parnell also affirmed the Defence Secretary's and the department's commitment to high ethical standards and adherence to regulations.
Al Jazeera reported it was unable to independently confirm The Financial Times' findings. The Defense Department, The Financial Times, and Morgan Stanley did not immediately respond to requests for comment outside of usual business hours, while BlackRock declined to comment.
Market Performance and Broader Scrutiny
The Financial Times also noted that, even if the alleged investment had proceeded, such a purchase would not have generated profit for the defense chief in the month following the strikes on Iran, which commenced on February 28.
The iShares Defense Industrials Active ETF reportedly fell by nearly 13 percent since that date, despite an overall rise of over 25 percent in the preceding year.
This report emerges amidst broader scrutiny concerning financial and prediction market trades that have fueled speculation about individuals with potential insider knowledge regarding US President Donald Trump’s war plans.