A broker acting on behalf of Pete Hegseth, the US defense secretary, allegedly tried to secure a multimillion-dollar investment in a major defense fund in the weeks before Washington launched military strikes against Iran, a claim the Pentagon quickly denied.
As reported by the Financial Times
According to a Financial Times Hegseth’s broker at Morgan Stanley approached BlackRock in February about buying a significant stake in the asset manager’s Defense Industrials Active ETF, the investigation said, citing three people familiar with the matter. The timing of the investigation, which came shortly before U.S. and Israeli forces began coordinated military action against Tehran, drew immediate scrutiny from financial analysts and ethics watchdogs alike.
According to the FT report, the approach by a broker on behalf of a high-profile potential client was flagged internally at BlackRock. BlackRock, Morgan Stanley and the Pentagon declined to comment on the matter.
What is IDEF?
The fund in question, which trades under the ticker IDEF on Nasdaq, is a $3.2 billion equity vehicle that BlackRock says pursues “growth opportunities by investing in companies that can benefit from increased government spending on defense and security amid geopolitical fragmentation and economic competition.”
Among its biggest holdings are defense conglomerates RTX, Lockheed Martin and Northrop Grumman, all of which count the US Department of Defense as their single largest customer, along with data integration firm Palantir. The fund is up 28 percent over the past year, although it has lost nearly 13 percent over the past month, suggesting it has not benefited from the market’s immediate reaction to the Middle East conflict.
Why the investment did not proceed
Ultimately, the transaction did not take place, although for administrative rather than ethical reasons. The IDEF fund, which was only launched in May last year, was not yet available on Morgan Stanley’s client platform at the time of inquiry. Although exchange-traded funds are designed to be as accessible as individual stocks, the sheer volume of these instruments, now in excess of 14,000 worldwide, means that most major brokers only have a subset of the options available.
It remains unclear whether Hegseth’s broker subsequently identified a defense-focused alternative investment vehicle.
Hegseth’s role in the Iran campaign
Financial questions come at a particularly sensitive time. Pete Hegseth has been named by President Donald Trump as the first member of his national security team to strongly advocate military action against Iran, and the defense secretary has been among the administration’s most vocal supporters of the campaign.
A pattern of financial control on Wall Street
The revelations are part of a wider pattern that has unsettled financial markets and regulators. Wall Street analysts have scrutinized trading activity in financial instruments and prediction markets in recent months in the run-up to major decisions made by the Trump administration, raising questions about the flow of non-public information.
ETFs have skyrocketed among individual investors due to their lower fee structures, more favorable tax treatment compared to mutual funds, and ease of entry and exit from positions.
Hegseth’s personal finances
Hegseth’s financial profile offers further context. During his tenure at Fox News from 2022 to 2024, he earned $4.6 million in salary, according to a disclosure form filed during the Senate confirmation process. During this period, he also collected nearly $500,000 in book advances, between $100,001 and $1 million in royalties, and nearly $900,000 in speaking fees.
His most recent financial disclosure, released in June 2025, revealed the defense secretary sold shares in 29 separate companies, with individual sales ranging from $1,001 to $50,000.
Pentagon denial and what comes next
The Pentagon’s unequivocal denial of the Financial Times report does little to quell the broader ethical questions the story raises. Even if the investment attempt was ultimately scuttled, the very fact that Hegseth’s broker was prepared to bid for a multimillion-dollar position in companies whose fortunes are directly tied to Pentagon spending at a time when the same department was preparing a major military operation is likely to fuel calls for a formal review of the defense secretary’s financial affairs.
